Insiders of Zibuyu Group Limited (HKG:2420) have had a great week after last week's HK$300m gain and they haven't stopped buying

Key Insights

• Significant insider control over Zibuyu Group implies vested interests in company growth
• Bingru Hua owns 52% of the company
• Insiders have bought recently

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To get a sense of who is truly in control of Zibuyu Group Limited (HKG:2420), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 72% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

A quick look at our data suggests that insiders have been buying shares in the company recently and their bets paid off last week after the stock gained 19%.

Let's delve deeper into each type of owner of Zibuyu Group, beginning with the chart below.

See our latest analysis for Zibuyu Group

What Does The Lack Of Institutional Ownership Tell Us About Zibuyu Group?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Zibuyu Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Zibuyu Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Zibuyu Group's case, its Top Key Executive, Bingru Hua, is the largest shareholder, holding 52% of shares outstanding. With 8.9% and 5.0% of the shares outstanding respectively, Shijian Wang and Tongmingyun Three Limited are the second and third largest shareholders. Additionally, the company's CEO Caixiong Chen directly holds 0.7% of the total shares outstanding.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Zibuyu Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders own more than half of Zibuyu Group Limited. This gives them effective control of the company. That means they own HK$1.4b worth of shares in the HK$1.9b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Zibuyu Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 5.0%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Zibuyu Group (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.