With 37% ownership, Tuya Inc. (NYSE:TUYA) insiders have a lot at stake
Key Insights
Insiders appear to have a vested interest in Tuya's growth, as seen by their sizeable ownership
A total of 3 investors have a majority stake in the company with 54% ownership
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
Every investor in Tuya Inc. (NYSE:TUYA) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 37% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
So, insiders of Tuya have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.
Let's take a closer look to see what the different types of shareholders can tell us about Tuya.
See our latest analysis for Tuya
What Does The Institutional Ownership Tell Us About Tuya?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Tuya does have institutional investors; and they hold a good portion of the company's 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 Tuya's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Tuya. The company's largest shareholder is New Enterprise Associates, Inc., with ownership of 23%. For context, the second largest shareholder holds about 21% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder. Xueji Wang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.
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. 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 Tuya
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
It seems insiders own a significant proportion of Tuya Inc.. Insiders own US$363m worth of shares in the US$991m company. 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-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
Private equity firms hold a 23% stake in Tuya. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Public Company Ownership
We can see that public companies hold 11% of the Tuya shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Tuya better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Tuya you should be aware of.
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.
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.
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