Key Insights

• Institutions' substantial holdings in TAL Education Group implies that they have significant influence over the company's share price
• A total of 10 investors have a majority stake in the company with 50% ownership
• 32% of TAL Education Group is held by insiders

A look at the shareholders of TAL Education Group (NYSE:TAL) can tell us which group is most powerful. The group holding the most number of shares in the company, around 45% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained US$273m in market cap last week. One-year return to shareholders is currently 8.2% and last week's gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of TAL Education Group.

What Does The Institutional Ownership Tell Us About TAL 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.

As you can see, institutional investors have a fair amount of stake in TAL Education Group. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at TAL Education Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in TAL Education Group. Looking at our data, we can see that the largest shareholder is the CEO Bangxin Zhang with 28% of shares outstanding. Yachao Liu is the second largest shareholder owning 4.2% of common stock, and Morgan Stanley, Investment Banking and Brokerage Investments holds about 3.5% of the company stock. Interestingly, the second-largest shareholder, Yachao Liu is also Chief Operating Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 TAL Education Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 TAL Education Group. Insiders own US$2.0b worth of shares in the US$6.2b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over TAL Education Group. 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.

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. For example, we've discovered 1 warning sign for TAL Education Group that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.