Key Insights
- The considerable ownership by retail investors in China Fortune Land Development indicates that they collectively have a greater say in management and business strategy
- 46% of the business is held by the top 25 shareholders
- Institutional ownership in China Fortune Land Development is 30%
Every investor in China Fortune Land Development Co., Ltd. (SHSE:600340) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 8.2% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 30% stock also took a hit.
Let's take a closer look to see what the different types of shareholders can tell us about China Fortune Land Development.
Check out our latest analysis for China Fortune Land Development
What Does The Institutional Ownership Tell Us About China Fortune Land Development?
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.
As you can see, institutional investors have a fair amount of stake in China Fortune Land Development. 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 China Fortune Land Development's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in China Fortune Land Development. Beijing Oriental UnionPay Investment Management Co., Ltd. is currently the largest shareholder, with 14% of shares outstanding. Ping An of China Asset Management (Hong Kong) Company Limited is the second largest shareholder owning 11% of common stock, and Ping'an Assets Management Co., Ltd. holds about 8.4% of the company stock.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of China Fortune Land Development
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.
Our data suggests that insiders own under 1% of China Fortune Land Development Co., Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. Keep in mind that it's a big company, and the insiders own CN¥57m worth of shares. The absolute value might be more important than the proportional share. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 54% of China Fortune Land Development shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Private Company Ownership
Our data indicates that Private Companies hold 16%, of the company's shares. 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. For example, we've discovered 2 warning signs for China Fortune Land Development that you should be aware of before investing here.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.