CEO Yau Lung Ho, Melco International Development Limited's (HKG:200) largest shareholder sees value of holdings go down 5.7% after recent drop

Key Insights

• Insiders appear to have a vested interest in Melco International Development's growth, as seen by their sizeable ownership
• Yau Lung Ho owns 50% of the company
• Institutions own 14% of Melco International Development

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To get a sense of who is truly in control of Melco International Development Limited (HKG:200), it is important to understand the ownership structure of the business. With 52% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 5.7% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of Melco International Development, beginning with the chart below.

See our latest analysis for Melco International Development

What Does The Institutional Ownership Tell Us About Melco International Development?

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.

As you can see, institutional investors have a fair amount of stake in Melco International Development. 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. 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 Melco International Development's historic earnings and revenue below, but keep in mind there's always more to the story.

Melco International Development is not owned by hedge funds. With a 50% stake, CEO Yau Lung Ho is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 1.5% by the third-largest shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Melco International Development

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders own more than half of Melco International Development Limited. This gives them effective control of the company. Insiders own HK$5.1b worth of shares in the HK$9.8b company. That's extraordinary! It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Melco International Development. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Melco International Development better, we need to consider many other factors. For example, we've discovered 1 warning sign for Melco International Development that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.