A look at the shareholders of EC Healthcare (HKG: 2138) can tell us which group is more powerful. Insiders often own a large portion of younger and smaller companies, while larger companies tend to have institutions as shareholders. I like to see at least a little insider ownership. As Charlie Munger said, âShow me the incentive and I’ll show you the result.
With a market cap of HK $ 13 billion, EC Healthcare 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 own shares in the company. Let’s dig deeper into each type of owner to learn more about EC Healthcare.
Check out our latest review for EC Healthcare
What does institutional ownership tell us about EC Healthcare?
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 businesses to have some institutions listed, especially if they are growing.
EC Healthcare already has institutions on the share register. Indeed, they hold a respectable stake in the company. This suggests some credibility among professional investors. But we cannot rely on this fact alone because institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp drop in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out EC Healthcare’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.
EC Healthcare is not owned by hedge funds. The company’s CEO, Chi Fai Tang, is the largest shareholder with 61% of the shares outstanding. With such a huge stake, we infer that they have significant control over the future of the business. This is generally considered a good sign when insiders own a significant number of company shares, and in this case, we are happy to see a company insider with such skin in the game. With 5.4 respectively % and 2.3% of shares outstanding, OrbiMed Advisors LLC and Goldman Sachs Group, Investment Banking and Securities Investments are the second and third shareholders.
While it makes sense to study a company’s institutional ownership data, it also makes sense to study analysts’ sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it can be helpful to know their overall vision for the future.
Insider Ownership of EC Healthcare
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders own more than half of EC Healthcare. This gives them effective control of the business. Insiders own HK $ 7.9 billion of shares in the HK $ 13 billion company. It’s extraordinary ! Most would say this is a positive, showing strong alignment with shareholders. You can click here to see if they have sold their stake.
General public property
With a 26% stake, the general public has some influence over EC Healthcare. 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.
Private equity firms hold a 5.4% stake in EC Healthcare. This suggests that they can influence key policy decisions. Some investors might be encouraged by this, as private equity is sometimes able to encourage strategies that help the market see the value of the business. Alternatively, these holders could withdraw from the investment after making it public.
While it is worth considering the different groups that own a business, there are other factors that are even more important. To do this, you need to know the 4 warning signs we spotted with EC Healthcare.
If you’d rather find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.
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 date 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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