Transcenta Holding Limited's (HKG:6628) largest shareholders are retail investors who were rewarded as market cap surged HK$130m last week

Key Insights

• Significant control over Transcenta Holding by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 6 investors have a majority stake in the company with 52% ownership
• Insiders have been buying lately

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To get a sense of who is truly in control of Transcenta Holding Limited (HKG:6628), it is important to understand the ownership structure of the business. We can see that retail 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).

As a result, retail investors were the biggest beneficiaries of last week’s 14% gain.

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

See our latest analysis for Transcenta Holding

What Does The Institutional Ownership Tell Us About Transcenta Holding?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Transcenta Holding already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Transcenta Holding's historic earnings and revenue below, but keep in mind there's always more to the story.

Transcenta Holding is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Eli Lilly Investment Consulting (Shanghai) Co., Ltd. with 16% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 10% of the stock. Xueming Qian, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 Transcenta Holding

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. 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.

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 most recent data indicates that insiders own a reasonable proportion of Transcenta Holding Limited. Insiders own HK$127m worth of shares in the HK$1.1b company. 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.

Private Equity Ownership

With an ownership of 28%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Transcenta Holding (of which 1 is a bit unpleasant!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.