Institutional owners may consider drastic measures as New Oriental Education & Technology Group Inc.'s (NYSE:EDU) recent US$512m drop adds to long-term losses

editorial-team@simplywallst.com (Simply Wall St)

Mon, Feb 24, 2025, 3:02 AM 5 min read

Every investor in New Oriental Education & Technology Group Inc. (NYSE:EDU) should be aware of the most powerful shareholder groups. With 59% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors endured the highest losses after the company's share price fell by 5.6% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 43% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell New Oriental Education & Technology Group, which might have negative implications on individual investors.

In the chart below, we zoom in on the different ownership groups of New Oriental Education & Technology Group.

View our latest analysis for New Oriental Education & Technology Group

ownership-breakdown — NYSE:EDU Ownership Breakdown February 24th 2025

What Does The Institutional Ownership Tell Us About New Oriental Education & Technology Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that New Oriental Education & Technology Group does have institutional investors; and they hold a good portion of the company's stock. 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 New Oriental Education & Technology Group, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — NYSE:EDU Earnings and Revenue Growth February 24th 2025

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in New Oriental Education & Technology Group. Our data suggests that Minhong Yu, who is also the company's Top Key Executive, holds the most number of shares at 12%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. FMR LLC is the second largest shareholder owning 7.8% of common stock, and GIC Private Limited holds about 6.2% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 New Oriental Education & Technology Group

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.

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 maintain a significant holding in New Oriental Education & Technology Group Inc.. It is very interesting to see that insiders have a meaningful US$1.0b stake in this US$8.6b business. 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

The general public, who are usually individual investors, hold a 15% stake in New Oriental Education & Technology Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand New Oriental Education & Technology Group better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.