Key Insights

• Insiders appear to have a vested interest in China Cultural Tourism and Agriculture Group's growth, as seen by their sizeable ownership
• The top 2 shareholders own 58% of the company
• Insiders have been buying lately

To get a sense of who is truly in control of China Cultural Tourism and Agriculture Group Limited (HKG:542), it is important to understand the ownership structure of the business. With 68% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Having purchased shares recently, insiders must be glad after market cap hit HK$1.4b last week.

In the chart below, we zoom in on the different ownership groups of China Cultural Tourism and Agriculture Group.

View our latest analysis for China Cultural Tourism and Agriculture Group

What Does The Lack Of Institutional Ownership Tell Us About China Cultural Tourism and Agriculture Group?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of China Cultural Tourism and Agriculture Group, for yourself, below.

China Cultural Tourism and Agriculture Group is not owned by hedge funds. With a 40% stake, CEO Lijun Yang is the largest shareholder. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 9.6% by the third-largest shareholder.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 China Cultural Tourism and Agriculture Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our information suggests that insiders own more than half of China Cultural Tourism and Agriculture Group Limited. This gives them effective control of the company. That means they own HK$977m worth of shares in the HK$1.4b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. 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 32% stake in China Cultural Tourism and Agriculture 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with China Cultural Tourism and Agriculture Group (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.