I am going to take a deep dive into Yashili International Holdings Ltd’s (SEHK:1230) most recent ownership structure, not a frequent subject of discussion among individual investors. Ownership structure of a company has been found to affect share performance over time. Since the same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, it is a useful exercise to deconstruct 1230’s shareholder registry.
See our latest analysis for Yashili International Holdings
Institutional Ownership
Institutional investors are one of the largest group of market participants and their buy-sell decisions on a company’s stock can significantly impact prices, more so, when there are relatively small amounts of shares available on the market to trade. A low institutional ownership of 1.08% puts 1230 on a list of companies that are not likely exposed to spikes in volatility resulting from institutional trading. Despite 1230 being a well-covered company with 7 analysts reporting on it, a low institutional ownership indicates that, perhaps, this group of investors simply do not see it as an interesting opportunity.
General Public Ownership
A big stake of 16.48% in 1230 is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.
Private Company Ownership
Potential investors in 1230 should also look at another important group of investors: private companies, with a stake of 6.39%, who are primarily invested because of strategic and capital gain interests. This kind of ownership, if predominantly strategic, can give these companies a significant power to affect 1230’s business strategy. Thus, potential investors should look into these business relations and check how it can impact long-term shareholder returns.
Next Steps:
With a low level of institutional ownership, investors in 1230 need not worry about non-fundamental factors such as ownership structure causing large impact on stock prices. However, ownership structure should not be the only focus of your research when constructing an investment thesis around 1230. Rather, you should be examining fundamental factors such as Yashili International Holdings’s past track record and financial health. I urge you to complete your research by taking a look at the following: