Advertisement
U.S. markets close in 4 hours 24 minutes
  • S&P 500

    5,252.93
    +4.44 (+0.08%)
     
  • Dow 30

    39,775.24
    +15.16 (+0.04%)
     
  • Nasdaq

    16,396.01
    -3.51 (-0.02%)
     
  • Russell 2000

    2,127.42
    +13.07 (+0.62%)
     
  • Crude Oil

    82.64
    +1.29 (+1.59%)
     
  • Gold

    2,237.30
    +24.60 (+1.11%)
     
  • Silver

    25.01
    +0.26 (+1.06%)
     
  • EUR/USD

    1.0805
    -0.0025 (-0.23%)
     
  • 10-Yr Bond

    4.1930
    -0.0030 (-0.07%)
     
  • GBP/USD

    1.2636
    -0.0002 (-0.02%)
     
  • USD/JPY

    151.1740
    -0.0720 (-0.05%)
     
  • Bitcoin USD

    71,092.16
    +1,821.32 (+2.63%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,971.22
    +39.24 (+0.49%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Should You Be Concerned About Yulong Eco-Materials Limited’s (NASDAQ:YECO) Investors?

Today, I will be analyzing Yulong Eco-Materials Limited’s (NASDAQ:YECO) recent ownership structure, an important but not-so-popular subject among individual investors. Ownership structure of a company has been found to affect share performance over time. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, which is why we’ll take a moment to analyse YECO’s shareholder registry. All data provided is as of the most recent financial year end.

See our latest analysis for Yulong Eco-Materials

NasdaqCM:YECO Ownership_summary Jan 20th 18
NasdaqCM:YECO Ownership_summary Jan 20th 18

Insider Ownership

I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. A major group of owners of YECO is individual insiders, sitting with a hefty 55.22% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). Another aspect of insider ownership is to learn about their recent transactions. Insiders buying company shares can be a positive indicator of future performance, but a selling decision can simply be driven by personal financial needs.

General Public Ownership

A substantial ownership of 44.78% in YECO is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.

What this means for you:

A relatively significant holding of company insiders could mean high alignment with shareholders. But at the same time, investors should be aware of the level of influence executives could have on governance decisions. However, if you are building an investment case for YECO, ownership structure alone should not dictate your decision to buy or sell the stock. Rather, you should be examining fundamental factors such as Yulong Eco-Materials’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:

  • 1. Financial Health: Is YECO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  • 2. Past Track Record: Has YECO been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of YECO’s historicals for more clarity.

  • 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

Advertisement