What you need to know about the investor mix of EEKA Fashion Holdings Limited (HKG: 3709)
The large shareholder groups of EEKA Fashion Holdings Limited (HKG: 3709) have power over the company. Generally speaking, as a business grows, institutions increase their participation. Conversely, insiders often decrease their ownership over time. Warren Buffett said he enjoys “a business with sustainable competitive advantages, led by skilled people and owner-centered.” So it’s nice to see some insider ownership as it may suggest that the management is owner-driven.
With a market cap of HK $ 8.7 billion, EEKA Fashion Holdings is a decent size, so it’s probably on the radar of institutional investors. Looking at our data on ownership groups (below), it appears that institutions are not listed in the share register. Let’s take a closer look at what different types of shareholders can tell us about EEKA Fashion Holdings.
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What does the lack of institutional ownership tell us about EEKA Fashion Holdings?
We don’t tend to see institutional investors owning stocks of very risky, lightly traded, or very small companies. While we sometimes see large companies without registered institutions, this is not particularly common.
There are several explanations why institutions do not hold shares. The most common is that the company is too small in relation to the funds under management, so that the institution does not bother to take a close look at the company. Alternatively, there could be something about the business that has kept institutional investors out. EEKA Fashion Holdings’ earnings and revenue history (below) may not be convincing to institutional investors – or they may simply not have taken a close look at the company.
We note that the hedge funds do not have a significant investment in EEKA Fashion Holdings. The company’s CEO, Ming Jin, is the largest shareholder with 40% of the shares outstanding. Rui Jin is the second largest shareholder holding 29% of the ordinary shares, and Hongmei He owns about 0.2% of the shares of the company. Note that two of the top three shareholders are also senior executives and board members, respectively, which once again indicates significant ownership by company insiders.
To make our study more interesting, we found that the top 2 shareholders have a controlling stake in the company, which means that they are powerful enough to influence the decisions of the company.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the feelings of analysts. While there is some coverage from analysts, the company is likely not widely covered. So he might get more attention, down the track.
Insider property of EEKA Fashion Holdings
The definition of company insiders can be subjective and vary from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company is accountable to the board of directors and the board must represent the interests of the shareholders. Notably, sometimes senior executives themselves sit on the board of directors.
Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our information suggests that insiders own more than half of EEKA Fashion Holdings Limited. This gives them effective control of the business. Given that it has a market cap of HK $ 8.7 billion, this means that insiders have a whopping HK $ 6.0 billion stock value in their name. Most would be happy to see the board invest alongside them. You might want to know if they bought or sold.
General public property
With a 31% stake, the general public has some influence over EEKA Fashion Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in line with other large shareholders.
While it is worth considering the different groups that own a business, there are other factors that are even more important. For example, we have identified 1 warning sign for EEKA Fashion Holdings that you need to be aware of.
Ultimately the future is the most important. You can access this free analyst forecast report for the company.
NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last day of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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