- Significant insider control over Wealthking Investments implies vested interests in company growth
- 51% of the business is held by the top 3 shareholders
- Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of Wealthking Investments Limited (HKG:1140), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 60% 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, insiders scored the highest last week as the company hit HK$3.8b market cap following a 100% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about Wealthking Investments.
See our latest analysis for Wealthking Investments
What Does The Lack Of Institutional Ownership Tell Us About Wealthking Investments?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Wealthking Investments' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.
Wealthking Investments is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Zhiwei Liu with 26% of shares outstanding. Fang Yang is the second largest shareholder owning 15% of common stock, and Tongchuangjiuding Investment Management Group Co., Ltd. holds about 9.3% of the company stock.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Wealthking Investments
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
It seems that insiders own more than half the Wealthking Investments Limited stock. This gives them a lot of power. Given it has a market cap of HK$3.8b, that means they have HK$2.3b worth of shares. 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
The general public, who are usually individual investors, hold a 27% stake in Wealthking Investments. 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 an ownership of 9.3%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Private Company Ownership
It seems that Private Companies own 3.5%, of the Wealthking Investments stock. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand Wealthking Investments better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Wealthking Investments (at least 1 which is potentially serious) , and understanding them should be part of your investment process.
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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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.