TradeGo FinTech Limited's (HKG:8017) market cap rose HK$95m last week; individual investors who hold 47% profited and so did insiders

Key Insights

• The considerable ownership by individual investors in TradeGo FinTech indicates that they collectively have a greater say in management and business strategy
• The top 5 shareholders own 52% of the company
• 28% of TradeGo FinTech is held by insiders

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To get a sense of who is truly in control of TradeGo FinTech Limited (HKG:8017), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched HK$857m last week, while insiders who own 28% also benefitted.

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

Check out our latest analysis for TradeGo FinTech

What Does The Lack Of Institutional Ownership Tell Us About TradeGo FinTech?

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. TradeGo FinTech's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Hedge funds don't have many shares in TradeGo FinTech. Looking at our data, we can see that the largest shareholder is the CEO Yong Liu with 25% of shares outstanding. With 18% and 3.9% of the shares outstanding respectively, Shenzhen Kingdom Sci-Tech Co., Ltd and TradeGo FinTech Limited., Employee Stock Ownership Plan are the second and third largest shareholders.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of TradeGo FinTech

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in TradeGo FinTech Limited. It has a market capitalization of just HK$857m, and insiders have HK$240m 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 47% 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.

Public Company Ownership

We can see that public companies hold 18% of the TradeGo FinTech shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with TradeGo FinTech (at least 1 which is concerning) , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.