Key Insights

• Significant control over Shanghai Mechanical & Electrical IndustryLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 2 investors have a majority stake in the company with 50% ownership
• Institutional ownership in Shanghai Mechanical & Electrical IndustryLtd is 13%

To get a sense of who is truly in control of Shanghai Mechanical & Electrical Industry Co.,Ltd. (SHSE:600835), 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 48% 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 collectively scored the highest last week as the company hit CN¥11b market cap following a 5.9% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Mechanical & Electrical IndustryLtd.

See our latest analysis for Shanghai Mechanical & Electrical IndustryLtd

What Does The Institutional Ownership Tell Us About Shanghai Mechanical & Electrical 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.

Shanghai Mechanical & Electrical IndustryLtd 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 Shanghai Mechanical & Electrical IndustryLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Shanghai Mechanical & Electrical IndustryLtd. Our data shows that Shanghai Electric Holdings Group Co., Ltd. is the largest shareholder with 48% of shares outstanding. In comparison, the second and third largest shareholders hold about 2.2% and 1.2% of the stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Shanghai Mechanical & Electrical IndustryLtd

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.

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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Shanghai Mechanical & Electrical IndustryLtd. 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.

Private Company Ownership

We can see that Private Companies own 48%, of the shares on issue. 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 Shanghai Mechanical & Electrical IndustryLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shanghai Mechanical & Electrical IndustryLtd , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.