If you want to know who really controls Chervon Holdings Limited (HKG:2285), then you’ll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 79% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, insiders as a group endured the highest losses after market cap fell by HK$1.0b.
Let’s delve deeper into each type of owner of Chervon Holdings, beginning with the chart below.
Check out the opportunities and risks within the HK Consumer Durables industry.
What Does The Institutional Ownership Tell Us About Chervon Holdings?
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 Chervon Holdings does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Chervon Holdings, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don’t have a meaningful investment in Chervon Holdings. The company’s CEO Longquan Pan is the largest shareholder with 53% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It’s usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we’re glad to see a company insider with such skin in the game. In comparison, the second and third largest shareholders hold about 20% and 5.5% of the stock. Interestingly, the second and third-largest shareholders also happen to be the Top Key Executive and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company’s top shareholders.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Chervon Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that insiders own more than half of Chervon Holdings Limited. This gives them effective control of the company. That means insiders have a very meaningful HK$11b stake in this HK$14b business. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
The general public– including retail investors — own 13% 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.
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. To that end, you should be aware of the 1 warning sign we’ve spotted with Chervon Holdings .
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.