Key Insights

• Significant control over Hubei Huaqiang High-Tech by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 70% of the company
• Institutions own 27% of Hubei Huaqiang High-Tech

Every investor in Hubei Huaqiang High-Tech Co., Ltd. (SHSE:688151) should be aware of the most powerful shareholder groups. With 51% stake, private companies possess the maximum shares in the company. 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¥5.2b last week,private companies took the most losses.

Let's delve deeper into each type of owner of Hubei Huaqiang High-Tech, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Hubei Huaqiang High-Tech?

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.

Hubei Huaqiang High-Tech 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. 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 Hubei Huaqiang High-Tech's earnings history below. Of course, the future is what really matters.

Hubei Huaqiang High-Tech is not owned by hedge funds. Our data shows that China South Industries Group Co.,Ltd. is the largest shareholder with 46% of shares outstanding. For context, the second largest shareholder holds about 25% of the shares outstanding, followed by an ownership of 2.4% by the third-largest shareholder.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Hubei Huaqiang High-Tech

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.

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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Hubei Huaqiang High-Tech. 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.

Private Company Ownership

It seems that Private Companies own 51%, of the Hubei Huaqiang High-Tech stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. For example, we've discovered 3 warning signs for Hubei Huaqiang High-Tech (1 is potentially serious!) that you should be aware of before investing here.

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.