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Every investor in K Wah International Holdings Limited (HKG:173) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.’
K. Wah International Holdings isn’t enormous, but it’s not particularly small either. It has a market capitalization of HK$12.00b, which means it would generally expect to see some institutions on the share registry. In the chart below below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about 173.
Check out our latest analysis for K. Wah International Holdings
What Does The Institutional Ownership Tell Us About K. Wah International Holdings?
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 K. Wah International Holdings does have institutional investors; and they hold 17.5% of the stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see K. Wah International Holdings’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
We note that hedge funds don’t have a meaningful investment in K. Wah International Holdings. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of K. Wah International Holdings
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.