Fire Rock Holdings Limited's (HKG:1909) Market Cap Dropped HK$476m Last Week; Individual Investors Bore the Brunt

Simply Wall St · Oct 4, 2023 21:42

Key Insights

Fire Rock Holdings' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
49% of the business is held by the top 14 shareholders
46% of Fire Rock Holdings is held by insiders

Every investor in Fire Rock Holdings Limited (HKG:1909) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 46% came under pressure after market cap dropped to HK$1.2b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Fire Rock Holdings.

Check out our latest analysis for Fire Rock Holdings

ownership-breakdown — SEHK:1909 Ownership Breakdown October 5th 2023

What Does The Institutional Ownership Tell Us About Fire Rock Holdings?

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.

Less than 5% of Fire Rock Holdings is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

earnings-and-revenue-growth — SEHK:1909 Earnings and Revenue Growth October 5th 2023

We note that hedge funds don't have a meaningful investment in Fire Rock Holdings. The company's largest shareholder is Yan Zhang, with ownership of 41%. With 5.0% and 2.2% of the shares outstanding respectively, Po Hu and The Vanguard Group, Inc. are the second and third largest shareholders.

On studying our ownership data, we found that 14 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Fire Rock Holdings

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Fire Rock Holdings Limited. It has a market capitalization of just HK$1.2b, and insiders have HK$546m worth of shares in their own names. We 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

The general public -- including retail investors -- own 51% of Fire Rock Holdings. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Fire Rock Holdings 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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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.