Nasdaq
華爾街日報Rongta Technology (Xiamen) Group Co., Ltd. (HKG:9881) surges 11%; private companies who own 39% shares profited along with insiders
Key Insights
- Significant control over Rongta Technology (Xiamen) Group by private companies implies that the general public has more power to influence management and governance-related decisions
- The top 2 shareholders own 71% of the company
- Insiders own 34% of Rongta Technology (Xiamen) Group
A look at the shareholders of Rongta Technology (Xiamen) Group Co., Ltd. (HKG:9881) can tell us which group is most powerful. The group holding the most number of shares in the company, around 39% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While private companies were the group that reaped the most benefits after last week’s 11% price gain, insiders also received a 34% cut.
In the chart below, we zoom in on the different ownership groups of Rongta Technology (Xiamen) Group.
View our latest analysis for Rongta Technology (Xiamen) Group
What Does The Lack Of Institutional Ownership Tell Us About Rongta Technology (Xiamen) Group?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
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. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Rongta Technology (Xiamen) Group, for yourself, below.
Rongta Technology (Xiamen) Group is not owned by hedge funds. The company's largest shareholder is Xiamen Rongxin Investment Co., Ltd, with ownership of 39%. For context, the second largest shareholder holds about 32% of the shares outstanding, followed by an ownership of 2.4% by the third-largest shareholder. Two of the top three shareholders happen to be Chief Executive Officer and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 71% stake.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Rongta Technology (Xiamen) Group
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
It seems insiders own a significant proportion of Rongta Technology (Xiamen) Group Co., Ltd.. Insiders own HK$433m worth of shares in the HK$1.3b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 25% stake in Rongta Technology (Xiamen) Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
It seems that Private Companies own 39%, of the Rongta Technology (Xiamen) Group stock. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Rongta Technology (Xiamen) Group (including 1 which doesn't sit too well with us) .
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.