Key Insights
- Adicon Holdings' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
- A total of 2 investors have a majority stake in the company with 51% ownership
- Insiders own 22% of Adicon Holdings
Every investor in Adicon Holdings Limited (HKG:9860) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, private equity firms collectively scored the highest last week as the company hit HK$5.8b market cap following a 10% gain in the stock.
Let's delve deeper into each type of owner of Adicon Holdings, beginning with the chart below.
View our latest analysis for Adicon Holdings
What Does The Institutional Ownership Tell Us About Adicon Holdings?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Adicon Holdings does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Adicon Holdings, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Adicon Holdings. The company's largest shareholder is The Carlyle Group Inc., with ownership of 39%. In comparison, the second and third largest shareholders hold about 12% and 9.9% of the stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Adicon Holdings
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
It seems insiders own a significant proportion of Adicon Holdings Limited. It has a market capitalization of just HK$5.8b, and insiders have HK$1.3b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
With a stake of 39%, private equity firms could influence the Adicon Holdings board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Adicon Holdings better, we need to consider many other factors. Be aware that Adicon Holdings is showing 1 warning sign in our investment analysis , you should know about...
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.