While private equity firms own 39% of Xunlei Limited (NASDAQ:XNET), individual investors are its largest shareholders with 45% ownership
Key Insights
Significant control over Xunlei by individual investors implies that the general public has more power to influence management and governance-related decisions
The top 5 shareholders own 51% of the company
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
To get a sense of who is truly in control of Xunlei Limited (NASDAQ:XNET), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 45% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And private equity firms on the other hand have a 39% ownership in the company.
Let's take a closer look to see what the different types of shareholders can tell us about Xunlei.
View our latest analysis for Xunlei
What Does The Institutional Ownership Tell Us About Xunlei?
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.
Xunlei already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Xunlei's historic earnings and revenue below, but keep in mind there's always more to the story.
Xunlei is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Xiaomi Ventures Limited with 39% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.0% and 2.7%, of the shares outstanding, respectively. Sean Zou, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Furthermore, CEO Jinbo Li is the owner of 1.0% of the company's shares.
On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Xunlei
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Shareholders would probably be interested to learn that insiders own shares in Xunlei Limited. As individuals, the insiders collectively own US$10m worth of the US$115m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 45% 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 39% stake in Xunlei. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Xunlei you should be aware of.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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.
