Key Insights
- China Modern Dairy Holdings' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
- 58% of the business is held by the top 2 shareholders
- Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
A look at the shareholders of China Modern Dairy Holdings Ltd. (HKG:1117) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are public companies with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, public companies as a group endured the highest losses last week after market cap fell by HK$554m.
In the chart below, we zoom in on the different ownership groups of China Modern Dairy Holdings.
View our latest analysis for China Modern Dairy Holdings
What Does The Institutional Ownership Tell Us About China Modern Dairy Holdings?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that China Modern Dairy Holdings does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 China Modern Dairy Holdings, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in China Modern Dairy Holdings. China Mengniu Dairy Company Limited is currently the largest shareholder, with 50% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.0% and 5.1%, of the shares outstanding, respectively.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 58% stake.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 China Modern Dairy Holdings
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our data suggests that insiders own under 1% of China Modern Dairy Holdings Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. Keep in mind that it's a big company, and the insiders own HK$166k worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, who are usually individual investors, hold a 30% stake in China Modern Dairy Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
Our data indicates that Private Companies hold 13%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Public Company Ownership
We can see that public companies hold 50% of the China Modern Dairy Holdings shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for China Modern Dairy Holdings that you should be aware of before investing here.
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.