Yahoo Movies Insiders own 25% of Waterdrop Inc. (NYSE:WDH) shares but retail investors control 27% of the company
Key Insights
The considerable ownership by retail investors in Waterdrop indicates that they collectively have a greater say in management and business strategy
59% of the business is held by the top 3 shareholders
Every investor in Waterdrop Inc. (NYSE:WDH) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 27% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And individual insiders on the other hand have a 25% ownership in the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of Waterdrop.
View our latest analysis for Waterdrop
What Does The Institutional Ownership Tell Us About Waterdrop?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Waterdrop does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Waterdrop's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Waterdrop. Looking at our data, we can see that the largest shareholder is the CEO Peng Shen with 25% of shares outstanding. Tencent Holdings Limited is the second largest shareholder owning 22% of common stock, and Boyu Capital Consultancy Co., Ltd. holds about 11% of the company stock.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Waterdrop
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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 Waterdrop Inc.. Insiders have a US$192m stake in this US$761m business. 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
With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Waterdrop. 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
With a stake of 11%, private equity firms could influence the Waterdrop board. 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
Public companies currently own 22% of Waterdrop stock. 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 Waterdrop better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Waterdrop , and understanding them should be part of your investment process.
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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