Xiaomi Corporation (HKG:1810) share price fell 5.3% last week; individual investors would not be happy

A look at the shareholders of Xiaomi Corporation (HKG:1810) can tell us which group is the most powerful. The group holding the largest number of shares in the company, around 46% to be precise, are individual investors. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

After a 5.3% drop in the share price last week, individual investors suffered the most losses, but insiders who own 35% of the shares were also affected.

Let’s dive deeper into each type of Xiaomi owner, starting with the table below.

Check out our latest analysis for Xiaomi

SEHK: 1810 Ownership Breakdown September 3, 2022

What does institutional ownership tell us about Xiaomi?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

Xiaomi already has institutions on the share register. Indeed, they hold a respectable stake in the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Xiaomi’s revenue and historical revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growth
SEHK: 1810 Earnings and Revenue Growth September 3, 2022

We note that hedge funds have no significant investment in Xiaomi. With a 26% stake, CEO Jun Lei is the largest shareholder. With 9.4% and 2.5% of the outstanding shares respectively, Bin Lin and BlackRock, Inc. are the second and third largest shareholders. Interestingly, the second largest shareholder, Bin Lin, is also Top Key Executive, again, indicating strong insider ownership among the company’s top shareholders.

After digging a little deeper, we found that the top 15 held combined ownership of 50% of the company, suggesting that no single shareholder has significant control over the company.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider property of Xiaomi

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Xiaomi Corporation. It is very interesting to see that insiders have a significant HK$97 billion stake in this HK$278 billion company. Good to see this level of investment. You can check here if these insiders have bought recently.

General public property

The general public, who are usually individual investors, hold a 46% stake in Xiaomi. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Xiaomi, we need to consider many other factors. Take risks for example – Xiaomi has 2 warning signs (and 1 of concern) that we think you should know about.

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Karen J. Nelson