Key Insights

• Significant insider control over AA Industrial Belting (Shanghai)Ltd implies vested interests in company growth
• 67% of the business is held by the top 2 shareholders
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of AA Industrial Belting (Shanghai) Co.,Ltd (SHSE:603580), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 67% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit CN¥3.4b market cap following a 21% gain in the stock.

Let's delve deeper into each type of owner of AA Industrial Belting (Shanghai)Ltd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About AA Industrial Belting (Shanghai)Ltd?

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 AA Industrial Belting (Shanghai)Ltd does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 AA Industrial Belting (Shanghai)Ltd's historic earnings and revenue below, but keep in mind there's always more to the story.

AA Industrial Belting (Shanghai)Ltd is not owned by hedge funds. Our data shows that Mu Lin Tu is the largest shareholder with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 33% and 0.6%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 AA Industrial Belting (Shanghai)Ltd

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.

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 most recent data indicates that insiders own the majority of AA Industrial Belting (Shanghai) Co.,Ltd. This means they can collectively make decisions for the company. Given it has a market cap of CN¥3.4b, that means they have CN¥2.3b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over AA Industrial Belting (Shanghai)Ltd. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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 3 warning signs with AA Industrial Belting (Shanghai)Ltd (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.