Could the ownership structure of Huijing Holdings Company Limited (HKG:9968) tell us something useful?

A look at the shareholders of Huijing Holdings Company Limited (HKG:9968) can tell us which group is the most powerful. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

Huijing Holdings is not a big company by global standards. It has a market cap of HK$1.5 billion, meaning it wouldn’t get the attention of many institutional investors. In the table below, we can see that the institutions are not registered in the share register. Let’s take a closer look at what different types of shareholders can tell us about Huijing Holdings.

Check out our latest analysis for Huijing Holdings

SEHK: 9968 Ownership Breakdown July 27, 2022

What does the lack of institutional ownership tell us about Huijing Holdings?

Small companies that are not very actively traded often lack institutional investors, but it is less common to see large companies without them.

There are several explanations why institutions do not own stocks. The most common is that the business is too small relative to the funds under management, so the institution doesn’t bother to look closely at the business. On the other hand, it’s always possible for professional investors to avoid a company because they think it’s not the best place for their money. Huijing Holdings’ earnings and revenue results (below) may not be convincing to institutional investors – or they may simply not have examined the company closely.

earnings-and-revenue-growth
SEHK: 9968 Earnings and Revenue Growth July 27, 2022

Huijing Holdings is not owned by hedge funds. The company’s largest shareholder is Ruixiang Lun, with an 85% stake. With such a stake in ownership, we infer that they have significant control over the future of the business. BNY Mellon Asset Management is the second largest shareholder with 0.08% of the common stock and The Vanguard Group, Inc. owns approximately 0.07% of the company’s stock.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.

Insider ownership of Huijing Holdings

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Our most recent data indicates that insiders own the majority of Huijing Holdings Company Limited. This means they can collectively make decisions for the business. So they have a HK$1.3 billion stake in this HK$1.5 billion business. Most would be delighted to see the board investing alongside them. You might want to find out (free) whether they bought or sold.

General public property

With a 15% stake, the general public, consisting mainly of individual investors, has some influence over Huijing Holdings. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Take risks for example – Huijing Holdings has 4 warning signs (and 2 that are a bit obnoxious) that we think you should know about.

Sure this may not be the best stock to buy. Therefore, you may want to see our free set of interesting prospects benefiting from a favorable financial situation.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.