Key Insights

• Xuelong GroupLtd's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 60% of the business is held by the top 4 shareholders
• Insiders own 36% of Xuelong GroupLtd

To get a sense of who is truly in control of Xuelong Group Co.,Ltd (SHSE:603949), it is important to understand the ownership structure of the business. With 39% 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 insiders who own 36% came under pressure after market cap dropped to CN¥2.4b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Xuelong GroupLtd.

What Does The Institutional Ownership Tell Us About Xuelong GroupLtd?

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.

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

Hedge funds don't have many shares in Xuelong GroupLtd. The company's largest shareholder is Hong Kong Luyuan Holdings Limited, with ownership of 20%. In comparison, the second and third largest shareholders hold about 15% and 13% of the stock. Cailin He, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Additionally, the company's CEO Pinyan He directly holds 12% of the total shares outstanding.

Our research also brought to light the fact that roughly 60% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. 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 Xuelong GroupLtd

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.

Our information suggests that insiders maintain a significant holding in Xuelong Group Co.,Ltd. Insiders have a CN¥861m stake in this CN¥2.4b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xuelong GroupLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 39%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Xuelong GroupLtd better, we need to consider many other factors. For example, we've discovered 2 warning signs for Xuelong GroupLtd that you should be aware of before investing here.

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.