Key Insights

• Given the large stake in the stock by institutions, Shanghai Aohua Photoelectricity Endoscope's stock price might be vulnerable to their trading decisions
• The top 10 shareholders own 51% of the company
• Insider ownership in Shanghai Aohua Photoelectricity Endoscope is 32%

To get a sense of who is truly in control of Shanghai Aohua Photoelectricity Endoscope Co., Ltd. (SHSE:688212), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors endured the highest losses after the company's share price fell by 6.0% last week. The recent loss, which adds to a one-year loss of 20% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. Hence, if weakness in Shanghai Aohua Photoelectricity Endoscope's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

In the chart below, we zoom in on the different ownership groups of Shanghai Aohua Photoelectricity Endoscope.

What Does The Institutional Ownership Tell Us About Shanghai Aohua Photoelectricity Endoscope?

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.

Shanghai Aohua Photoelectricity Endoscope already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Shanghai Aohua Photoelectricity Endoscope, (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 Shanghai Aohua Photoelectricity Endoscope. Looking at our data, we can see that the largest shareholder is the CEO Xiaozhou Gu with 16% of shares outstanding. With 13% and 4.8% of the shares outstanding respectively, Kang Gu and China Asset Management Co. Ltd. are the second and third largest shareholders.

We did some more digging and found that 10 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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

Insider Ownership Of Shanghai Aohua Photoelectricity Endoscope

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 a reasonable proportion of Shanghai Aohua Photoelectricity Endoscope Co., Ltd.. Insiders have a CN¥2.2b stake in this CN¥6.8b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shanghai Aohua Photoelectricity Endoscope. 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 Company Ownership

It seems that Private Companies own 6.8%, of the Shanghai Aohua Photoelectricity Endoscope 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 Shanghai Aohua Photoelectricity Endoscope better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Shanghai Aohua Photoelectricity Endoscope (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

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.