Smart-Core Holdings Limited's (HKG:2166) most bullish insider, CEO Weidong Tian must be pleased with the recent 14% gain
Key Insights
- Insiders appear to have a vested interest in Smart-Core Holdings' growth, as seen by their sizeable ownership
- Weidong Tian owns 56% of the company
- Past performance of a company along with ownership data serve to give a strong idea about prospects for a business
If you want to know who really controls Smart-Core Holdings Limited (HKG:2166), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 77% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, insiders scored the highest last week as the company hit HK$982m market cap following a 14% gain in the stock.
In the chart below, we zoom in on the different ownership groups of Smart-Core Holdings.
Check out our latest analysis for Smart-Core Holdings
What Does The Institutional Ownership Tell Us About Smart-Core 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.
Since institutions own only a small portion of Smart-Core Holdings, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.
Hedge funds don't have many shares in Smart-Core Holdings. The company's CEO Weidong Tian is the largest shareholder with 56% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. In comparison, the second and third largest shareholders hold about 11% and 8.1% of the stock. Interestingly, the third-largest shareholder, Hongbing Liu is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Smart-Core Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
It seems that insiders own more than half the Smart-Core Holdings Limited stock. This gives them a lot of power. That means they own HK$753m worth of shares in the HK$982m company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Smart-Core Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Smart-Core Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Smart-Core Holdings you should be aware of, and 3 of them make us uncomfortable.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.