Key Insights

• Riyue Heavy IndustryLtd's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 51% of the company
• 17% of Riyue Heavy IndustryLtd is held by Institutions

Every investor in Riyue Heavy Industry Co.,Ltd (SHSE:603218) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 51% ownership. 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¥11b market cap following a 11% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Riyue Heavy IndustryLtd.

What Does The Institutional Ownership Tell Us About Riyue Heavy IndustryLtd?

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 Riyue Heavy IndustryLtd. 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 Riyue Heavy IndustryLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Riyue Heavy IndustryLtd. Looking at our data, we can see that the largest shareholder is the CEO Ming Kang Fu with 39% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 8.9% of the stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Riyue Heavy IndustryLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our information suggests that insiders own more than half of Riyue Heavy Industry Co.,Ltd. This gives them effective control of the company. That means insiders have a very meaningful CN¥5.4b stake in this CN¥11b business. 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 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Riyue Heavy IndustryLtd. 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 Riyue Heavy IndustryLtd better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Riyue Heavy IndustryLtd you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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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.