Key Insights

• Significant insider control over Zibuyu Group implies vested interests in company growth
• Bingru Hua owns 52% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Zibuyu Group Limited (HKG:2420) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 72% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit HK$1.6b market cap following a 37% gain in the stock.

Let's delve deeper into each type of owner of Zibuyu Group, beginning with the chart below.

See our latest analysis for Zibuyu Group

What Does The Lack Of Institutional Ownership Tell Us About Zibuyu 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 are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Zibuyu Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Zibuyu Group is not owned by hedge funds. With a 52% stake, CEO Bingru Hua is the largest shareholder. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. With 8.9% and 5.6% of the shares outstanding respectively, Shijian Wang and Tongmingyun Three Limited are the second and third largest shareholders. Interestingly, the second-largest shareholder, Shijian Wang is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

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 Zibuyu Group

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 most recent data indicates that insiders own the majority of Zibuyu Group Limited. This means they can collectively make decisions for the company. That means they own HK$1.2b worth of shares in the HK$1.6b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Zibuyu Group. 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 5.6%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zibuyu Group better, we need to consider many other factors. For instance, we've identified 4 warning signs for Zibuyu Group that you should be aware of.

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.