Could Emperor Watch & Jewellery Limited’s (HKG:887) Investor Composition Influence The Stock Price?

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If you want to know who really controls Emperor Watch & Jewellery Limited (HKG:887), then you’ll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Emperor Watch & Jewellery is not a large company by global standards. It has a market capitalization of HK$1.9b, which means it wouldn’t have the attention of many institutional investors. In the chart below below, we can see that institutions are noticeable on the share registry. Let’s take a closer look to see what the different types of shareholder can tell us about 887.

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SEHK:887 Ownership Summary, March 24th 2019
SEHK:887 Ownership Summary, March 24th 2019

What Does The Institutional Ownership Tell Us About Emperor Watch & Jewellery?

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 companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors own 15% of Emperor Watch & Jewellery. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Emperor Watch & Jewellery, (below). Of course, keep in mind that there are other factors to consider, too.

SEHK:887 Income Statement, March 24th 2019
SEHK:887 Income Statement, March 24th 2019

Hedge funds don’t have many shares in Emperor Watch & Jewellery. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Emperor Watch & Jewellery

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.

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.