Key Insights
- Leoch International Technology's significant insider ownership suggests inherent interests in company's expansion
- Li Dong owns 73% of the company
- Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
Every investor in Leoch International Technology Limited (HKG:842) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 74% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Clearly, insiders benefitted the most after the company's market cap rose by HK$415m last week.
Let's take a closer look to see what the different types of shareholders can tell us about Leoch International Technology.
See our latest analysis for Leoch International Technology
What Does The Lack Of Institutional Ownership Tell Us About Leoch International Technology?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Leoch International Technology might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
It looks like hedge funds own 5.0% of Leoch International Technology shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data suggests that Li Dong, who is also the company's Top Key Executive, holds the most number of shares at 73%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. RAYS Capital Partners Limited is the second largest shareholder owning 5.0% of common stock, and Dimensional Fund Advisors LP holds about 0.09% of the company stock.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Leoch International Technology
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own the majority of Leoch International Technology Limited. This means they can collectively make decisions for the company. Given it has a market cap of HK$2.6b, that means they have HK$1.9b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 21% stake in Leoch International Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Leoch International Technology better, we need to consider many other factors. For example, we've discovered 2 warning signs for Leoch International Technology (1 is concerning!) that you should be aware of before investing here.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.