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Significant insider control over Park Ha Biological Technology implies vested interests in company growth
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Xiaoqiu Zhang owns 72% of the company
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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 Park Ha Biological Technology Co., Ltd. (NASDAQ:PHH), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion’s share in the company with 72% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, insiders were the biggest beneficiaries of last week’s 35% gain.
In the chart below, we zoom in on the different ownership groups of Park Ha Biological Technology.
See our latest analysis for Park Ha Biological Technology
Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.
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. Park Ha Biological Technology’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.
Park Ha Biological Technology is not owned by hedge funds. The company’s CEO Xiaoqiu Zhang is the largest shareholder with 72% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. With 9.5% and 0.06% of the shares outstanding respectively, Changxin International Limited Partnership and Geode Capital Management, LLC are the second and third largest shareholders.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.
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. 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.
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.
It seems that insiders own more than half the Park Ha Biological Technology Co., Ltd. stock. This gives them a lot of power. That means they own US$616m worth of shares in the US$853m company. That’s quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.
The general public, who are usually individual investors, hold a 18% stake in Park Ha Biological Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
It seems that Private Companies own 9.5%, of the Park Ha Biological Technology stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
It’s always worth thinking about the different groups who own shares in a company. But to understand Park Ha Biological Technology better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 4 warning signs with Park Ha Biological Technology (at least 1 which is significant) , 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.
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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.