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華爾街日報Private companies who have a significant stake must be disappointed along with institutions after China Coal Energy Company Limited's (HKG:1898) market cap dropped by HK$7.8b
Key Insights
- The considerable ownership by private companies in China Coal Energy indicates that they collectively have a greater say in management and business strategy
- The largest shareholder of the company is China National Coal Group Corporation with a 58% stake
- 22% of China Coal Energy is held by Institutions
To get a sense of who is truly in control of China Coal Energy Company Limited (HKG:1898), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 5.5% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 22% stock also took a hit.
Let's delve deeper into each type of owner of China Coal Energy, beginning with the chart below.
View our latest analysis for China Coal Energy
What Does The Institutional Ownership Tell Us About China Coal Energy?
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.
We can see that China Coal Energy does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see China Coal Energy's historic earnings and revenue below, but keep in mind there's always more to the story.
China Coal Energy is not owned by hedge funds. China National Coal Group Corporation is currently the company's largest shareholder with 58% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 12% and 3.7% of the stock.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of China Coal Energy
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.
We note our data does not show any board members holding shares, personally. It is rare to see such a low level of personal ownership, amongst the board (and it is possible that our data might be incomplete). Concerned investors should check here to see if insiders have been selling or buying.
General Public Ownership
The general public, who are usually individual investors, hold a 15% stake in China Coal Energy. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
We can see that Private Companies own 59%, of the shares on issue. 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.
Public Company Ownership
Public companies currently own 3.7% of China Coal Energy stock. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand China Coal Energy better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with China Coal Energy .
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.