Key Insights

• Edan Instruments' significant insider ownership suggests inherent interests in company's expansion
• 55% of the business is held by the top 3 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 Edan Instruments, Inc. (SZSE:300206), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥400m last week.

Let's delve deeper into each type of owner of Edan Instruments, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Edan Instruments?

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.

We can see that Edan Instruments 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Edan Instruments' earnings history below. Of course, the future is what really matters.

Edan Instruments is not owned by hedge funds. With a 21% stake, CEO Hao Zhang is the largest shareholder. The second and third largest shareholders are Youdong Zu and Xicheng Xie, with an equal amount of shares to their name at 17%. Note that two of the top three shareholders are also Chief Financial Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Edan Instruments

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.

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 Edan Instruments, Inc.. This gives them effective control of the company. So they have a CN¥3.2b stake in this CN¥5.8b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Edan Instruments. 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. To that end, you should learn about the 4 warning signs we've spotted with Edan Instruments (including 1 which can't be ignored) .

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.