Key Insights

• Guoguang ElectricLtd.Chengdu's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Ya Zhang with a 51% stake
• Institutional ownership in Guoguang ElectricLtd.Chengdu is 16%

To get a sense of who is truly in control of Guoguang Electric Co.,Ltd.Chengdu (SHSE:688776), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 51% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week's 38% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Guoguang ElectricLtd.Chengdu.

What Does The Institutional Ownership Tell Us About Guoguang ElectricLtd.Chengdu?

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.

Guoguang ElectricLtd.Chengdu 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 Guoguang ElectricLtd.Chengdu, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Guoguang ElectricLtd.Chengdu. Ya Zhang is currently the largest shareholder, with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. Henan Guozhiguang Electronic Information Technology Research and Development Center (LP) is the second largest shareholder owning 9.4% of common stock, and Longcheng (Shenzhen) Asset Management Co., Ltd. holds about 5.4% of the company stock.

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. 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 Guoguang ElectricLtd.Chengdu

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 that insiders own more than half the Guoguang Electric Co.,Ltd.Chengdu stock. This gives them a lot of power. Given it has a market cap of CN¥5.7b, that means they have CN¥2.9b worth of shares. 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

The general public, who are usually individual investors, hold a 16% stake in Guoguang ElectricLtd.Chengdu. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 5.4%, 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 11%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. Take risks for example - Guoguang ElectricLtd.Chengdu has 2 warning signs we think you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.