Key Insights

• The considerable ownership by private companies in Hengtai Securities indicates that they collectively have a greater say in management and business strategy

• 59% of the business is held by the top 3 shareholders

• 20% of Hengtai Securities is held by Institutions

Every investor in Hengtai Securities Co., Ltd. (HKG:1476) should be aware of the most powerful shareholder groups.  With 46% stake, private companies possess the maximum shares in the company.   In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, private companies endured the biggest losses as the stock fell by 11%.    

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

SEHK:1476 Ownership Breakdown March 12th 2024

What Does The Institutional Ownership Tell Us About Hengtai Securities?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Hengtai Securities does have institutional investors; and they hold a good portion of the company's stock.  This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes.  If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Hengtai Securities' earnings history below. Of course, the future is what really matters.

SEHK:1476 Earnings and Revenue Growth March 12th 2024

Hedge funds don't have many shares in Hengtai Securities.      Looking at our data, we can see that the largest shareholder is Beijing Huarong Comprehensive Investment Co., Ltd. with 30% of shares outstanding.       TianFeng Securities Co., Ltd., Asset Management Arm is the second largest shareholder owning 17% of common stock, and Baotou Huazi Industry Co., Ltd holds about 12% of the company stock.  

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 59% stake.  

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 Hengtai Securities

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders.  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.

Our data cannot confirm that board members are holding shares personally.   We do not see this low level of ownership often, and it is possible our data is imperfect. But shareholders can  click here to check if insiders have been selling stock.  

General Public Ownership

The general public-- including retail investors -- own 23% stake in the company, and hence can't easily be ignored.   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 Company Ownership

Our data indicates that Private Companies hold 46%, 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.  

Public Company Ownership

We can see that public companies hold 12% of the Hengtai Securities shares on issue.  This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.  

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.    Like risks, for instance. Every company has them, and we've spotted   2 warning signs for Hengtai Securities  (of which 1 is a bit unpleasant!) you should know about.    

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.