Key Insights

• Insiders appear to have a vested interest in China Cultural Tourism and Agriculture Group's growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 58% ownership
• Insiders have bought recently

To get a sense of who is truly in control of China Cultural Tourism and Agriculture Group Limited (HKG:542), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 68% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Insiders who purchased recently should be particularly happy after the stock gained 39% in the past week.

Let's delve deeper into each type of owner of China Cultural Tourism and Agriculture Group, beginning with the chart below.

What Does The Lack Of Institutional Ownership Tell Us About China Cultural Tourism and Agriculture Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. 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. China Cultural Tourism and Agriculture Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

China Cultural Tourism and Agriculture Group is not owned by hedge funds. With a 40% stake, CEO Lijun Yang is the largest shareholder. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 9.6% by the third-largest shareholder.

After doing some more digging, we found that the top 2 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 China Cultural Tourism and Agriculture Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our most recent data indicates that insiders own the majority of China Cultural Tourism and Agriculture Group Limited. This means they can collectively make decisions for the company. Given it has a market cap of HK$1.5b, that means they have HK$1.0b 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 32% stake in China Cultural Tourism and Agriculture Group. 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.

Next Steps:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with China Cultural Tourism and Agriculture Group (at least 1 which doesn't sit too well with us) , 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.