Key Insights

• Significant control over Huarui Electrical ApplianceLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 51% of the company
• Insiders own 25% of Huarui Electrical ApplianceLtd

Every investor in Huarui Electrical Appliance Co.,Ltd. (SZSE:300626) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 43% 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.

While institutions who own 33% came under pressure after market cap dropped to CN¥1.2b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Huarui Electrical ApplianceLtd.

What Does The Institutional Ownership Tell Us About Huarui Electrical ApplianceLtd?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Huarui Electrical ApplianceLtd. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Huarui Electrical ApplianceLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Huarui Electrical ApplianceLtd. Our data shows that Rui Liang Sun is the largest shareholder with 23% of shares outstanding. In comparison, the second and third largest shareholders hold about 18% and 5.0% of the stock.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Huarui Electrical ApplianceLtd

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.

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.

Our information suggests that insiders maintain a significant holding in Huarui Electrical Appliance Co.,Ltd.. It has a market capitalization of just CN¥1.2b, and insiders have CN¥289m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Huarui Electrical ApplianceLtd. 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.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Huarui Electrical ApplianceLtd (at least 3 which are significant) , and understanding them should be part of your investment process.

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.

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.