A look at the shareholders of Chiho Environmental Group Limited (HKG:976) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 61% ownership. 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, private equity firms collectively scored the highest last week as the company hit HK$1.5b market cap following a 13% gain in the stock.
In the chart below, we zoom in on the different ownership groups of Chiho Environmental Group.
What Does The Lack Of Institutional Ownership Tell Us About Chiho Environmental Group?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it’s unusual to see larger companies without any institutional investors.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Chiho Environmental Group, for yourself, below.
Hedge funds don’t have many shares in Chiho Environmental Group. Looking at our data, we can see that the largest shareholder is USUM Investment Group Co., Ltd. with 61% of shares outstanding. This implies that they have majority interest control of the future of the company. Mingjie Zhang is the second largest shareholder owning 8.9% of common stock, and Dimensional Fund Advisors LP holds about 0.02% of the company stock.
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 Chiho Environmental Group
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
Shareholders would probably be interested to learn that insiders own shares in Chiho Environmental Group Limited. In their own names, insiders own HK$133m worth of stock in the HK$1.5b company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. 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 Chiho Environmental Group. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Equity Ownership
With a stake of 61%, private equity firms could influence the Chiho Environmental Group board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
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. Take risks for example – Chiho Environmental Group has 1 warning sign we think you should be aware of.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
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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