Key Insights

• Wuxi Best Precision Machinery's significant insider ownership suggests inherent interests in company's expansion
• Yu Hua Cao owns 59% of the company
• Institutions own 12% of Wuxi Best Precision Machinery

To get a sense of who is truly in control of Wuxi Best Precision Machinery Co., Ltd. (SZSE:300580), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 59% 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 as a group endured the highest losses after market cap fell by CN¥827m.

In the chart below, we zoom in on the different ownership groups of Wuxi Best Precision Machinery.

What Does The Institutional Ownership Tell Us About Wuxi Best Precision Machinery?

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.

Wuxi Best Precision Machinery already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Wuxi Best Precision Machinery's historic earnings and revenue below, but keep in mind there's always more to the story.

Wuxi Best Precision Machinery is not owned by hedge funds. The company's largest shareholder is Yu Hua Cao, with ownership of 59%. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 2.6% of the shares outstanding, followed by an ownership of 2.4% by the third-largest shareholder.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Wuxi Best Precision Machinery

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

It seems that insiders own more than half the Wuxi Best Precision Machinery Co., Ltd. stock. This gives them a lot of power. Insiders own CN¥4.9b worth of shares in the CN¥8.3b company. That's extraordinary! Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Wuxi Best Precision Machinery. 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 Wuxi Best Precision Machinery better, we need to consider many other factors. For instance, we've identified 2 warning signs for Wuxi Best Precision Machinery that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com