Key Insights

• Hainan Haiyao's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 44% of the business is held by the top 13 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Hainan Haiyao Co., Ltd. (SZSE:000566) should be aware of the most powerful shareholder groups. With 56% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, individual investors benefitted the most after the company's market cap rose by CN¥675m last week.

In the chart below, we zoom in on the different ownership groups of Hainan Haiyao.

What Does The Institutional Ownership Tell Us About Hainan Haiyao?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Since institutions own only a small portion of Hainan Haiyao, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in Hainan Haiyao. Hainan Huatong Industrial Co., Ltd. is currently the largest shareholder, with 23% of shares outstanding. Shenzhen Nanfang Tongzheng Investment Co., Ltd. is the second largest shareholder owning 10% of common stock, and Xicheng Liu holds about 8.3% of the company stock. Xicheng Liu, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

On studying our ownership data, we found that 13 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Hainan Haiyao

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. 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 some shares in Hainan Haiyao Co., Ltd.. As individuals, the insiders collectively own CN¥487m worth of the CN¥5.9b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public -- including retail investors -- own 56% of Hainan Haiyao. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

Private equity firms hold a 10% stake in Hainan Haiyao. This suggests they can be influential in key policy decisions. 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 23%, 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:

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 - Hainan Haiyao has 1 warning sign we think you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.