Key Insights

• The considerable ownership by private companies in Hubei Donper Electromechanical Group indicates that they collectively have a greater say in management and business strategy
• A total of 4 investors have a majority stake in the company with 51% ownership
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Hubei Donper Electromechanical Group Co., Ltd. (SHSE:601956), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥373m.

Let's take a closer look to see what the different types of shareholders can tell us about Hubei Donper Electromechanical Group.

What Does The Institutional Ownership Tell Us About Hubei Donper Electromechanical Group?

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.

Hubei Donper Electromechanical Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hubei Donper Electromechanical Group, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Hubei Donper Electromechanical Group. Looking at our data, we can see that the largest shareholder is Huangshi Huizhi Investment Partnership Enterprise (Limited Partnership) with 47% of shares outstanding. Jiangsu Jiangsu Lucky Motors Group Co., Ltd. is the second largest shareholder owning 1.3% of common stock, and Shenzhen Hengbang Zhaofeng Private Fund Management Co., Ltd. holds about 1.2% of the company stock.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Hubei Donper Electromechanical Group

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.

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 most recent data indicates that insiders own less than 1% of Hubei Donper Electromechanical Group Co., Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. It has a market capitalization of just CN¥3.1b, and the board has only CN¥8.0m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 50%, of the Hubei Donper Electromechanical Group stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hubei Donper Electromechanical Group better, we need to consider many other factors. Be aware that Hubei Donper Electromechanical Group is showing 1 warning sign in our investment analysis , you should know about...

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.

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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.