Key Insights

• Significant control over OKE Precision Cutting Tools by retail investors implies that the general public has more power to influence management and governance-related decisions
• 52% of the business is held by the top 7 shareholders
• Insiders own 25% of OKE Precision Cutting Tools

Every investor in OKE Precision Cutting Tools Co., Ltd. (SHSE:688308) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 27% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 27% came under pressure after market cap dropped to CN¥3.1b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of OKE Precision Cutting Tools.

What Does The Institutional Ownership Tell Us About OKE Precision Cutting Tools?

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.

We can see that OKE Precision Cutting Tools does have institutional investors; and they hold a good portion of the company's stock. 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. 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 OKE Precision Cutting Tools, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in OKE Precision Cutting Tools. Looking at our data, we can see that the largest shareholder is Meihe Yuan with 16% of shares outstanding. With 10% and 9.1% of the shares outstanding respectively, GEM Co., Ltd. and Wenqing Tan are the second and third largest shareholders. Wenqing Tan, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of OKE Precision Cutting Tools

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of OKE Precision Cutting Tools Co., Ltd.. Insiders own CN¥779m worth of shares in the CN¥3.1b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over OKE Precision Cutting Tools. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 5.9%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 5.2%, 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.

Public Company Ownership

We can see that public companies hold 10% of the OKE Precision Cutting Tools shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand OKE Precision Cutting Tools better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for OKE Precision Cutting Tools (of which 1 doesn't sit too well with us!) you should know about.

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.

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