Scholar Education Group's (HKG:1769) stock price dropped 12% last week; individual investors would not be happy

Key Insights

• Significant control over Scholar Education Group by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 9 shareholders own 43% of the company
• Insiders own 30% of Scholar Education Group

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A look at the shareholders of Scholar Education Group (HKG:1769) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 12% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 30% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Scholar Education Group.

View our latest analysis for Scholar Education Group

What Does The Institutional Ownership Tell Us About Scholar Education Group?

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.

We can see that Scholar Education 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Scholar Education Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Scholar Education Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Scholar Education Group's case, its Top Key Executive, Qiyuan Chen, is the largest shareholder, holding 28% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 2.2% of the stock. Furthermore, CEO Mingzhi Qi is the owner of 1.6% of the company's shares.

On studying our ownership data, we found that 9 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. 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 Scholar Education Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 maintain a significant holding in Scholar Education Group. Insiders have a HK$470m stake in this HK$1.6b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 57% of Scholar Education Group shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Scholar Education Group (1 is a bit concerning!) that you should be aware of before investing here.

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.