This is what the shareholding structure of China Xinhua Education Group Limited looks like (HKG:2779)

Large shareholder groups in China Xinhua Education Group Limited (HKG:2779) have power over the company. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said he likes “a business with enduring competitive advantages that is led by capable, owner-oriented people.” So it’s nice to see some insider ownership, as it may suggest management is owner-driven.

China Xinhua Education Group is not a big company by global standards. It has a market cap of HK$1.8 billion, meaning it wouldn’t get the attention of many institutional investors. Our analysis of company ownership, below, shows that institutional investors have yet to buy much of the company. We can zoom in on the different ownership groups, to learn more about China Xinhua Education Group.

Check out our latest analysis for China Xinhua Education Group

SEHK: 2779 Ownership Breakdown March 15, 2022

What does institutional ownership tell us about China Xinhua Education Group?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

The institutions have a very small stake in China Xinhua Education Group. This indicates that the company is on the radar of some funds, but it is not particularly popular with professional investors at the moment. If the company strengthens from here, we could see a situation where more institutions are eager to buy. We sometimes see a rise in the stock price when a few large institutions want to buy a certain stock at the same time. Earnings and revenue history, which you can see below, could be helpful in determining whether more institutional investors will want the stock. Of course, there are also many other factors to consider.

earnings-and-revenue-growth
SEHK: 2779 Earnings and Revenue Growth March 15, 2022

Hedge funds do not have many shares in China Xinhua Education Group. Our data shows that Junbao Wu is the largest shareholder with 72% of shares outstanding. With such a stake in ownership, we infer that they have significant control over the future of the business. In comparison, the second and third shareholders hold around 0.9% and 0.5% of the shares.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. We don’t see any analyst coverage of the stock at this time, so the company is unlikely to be widely held.

Insider owned by Chinese Xinhua Education Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

It appears that insiders own more than half of the shares of China Xinhua Education Group Limited. It gives them a lot of power. So they have a HK$1.3 billion stake in this HK$1.8 billion business. Good to see this level of investment. You can check here if these insiders have bought recently.

General public property

The general public, who are usually individual investors, hold a 27% stake in China Xinhua Education Group. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand China Xinhua Education Group, we need to consider many other factors. To this end, you should be aware of the 2 warning signs we spotted with China Xinhua Education Group.

Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of interesting companies.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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