A look at the shareholders of China New Higher Education Group Limited (HKG:2001) can tell us which group is most powerful.
Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.
Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.
China New Higher Education Group is not a large company by global standards. It has a market capitalization of HK$4.8b, which means it wouldn’t have the attention of many institutional investors.
Our analysis of the ownership of the company, below, shows that
institutions own shares in the company.
We can zoom in on the different ownership groups, to learn more about 2001.
What Does The Institutional Ownership Tell Us About China New Higher Education Group?
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.
As you can see, institutional investors own 19% of China New Higher Education Group.
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.
When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see China New Higher Education Group’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
Hedge funds don’t have many shares in China New Higher Education Group.
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 New Higher Education Group
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.
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 insiders own a significant proportion of China New Higher Education Group Limited.
It has a market capitalization of just HK$4.8b, and insiders have HK$1.7b worth of shares in their own names.
I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 19% ownership, the general public have some degree of sway over 2001.
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 6.8%, private equity firms could influence the 2001 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.
Private Company Ownership
Our data indicates that Private Companies hold 20%, of the company’s shares.
Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.
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