X Financial's significant insider ownership suggests inherent interests in company's expansion
53% of the business is held by the top 3 shareholders
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of X Financial (NYSE:XYF), 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 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
So, insiders of X Financial have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.
Let's take a closer look to see what the different types of shareholders can tell us about X Financial.
What Does The Institutional Ownership Tell Us About X Financial?
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.
Since institutions own only a small portion of X Financial, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.
NYSE:XYF Earnings and Revenue Growth June 10th 2023
Hedge funds don't have many shares in X Financial. Looking at our data, we can see that the largest shareholder is the CEO Yue Tang with 37% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.4% and 6.9% of the stock.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of X Financial
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. 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.
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.
Our information suggests that insiders own more than half of X Financial. This gives them effective control of the company. Given it has a market cap of US$196m, that means they have US$105m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 45% stake in X Financial. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
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. Take risks for example - X Financial has 2 warning signs (and 1 which is concerning) we think you should know about.
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.
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