Key Insights

• Significant insider control over Shenzhen Xinyuren Technology implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 53% ownership
• Institutional ownership in Shenzhen Xinyuren Technology is 17%

Every investor in Shenzhen Xinyuren Technology Co., Ltd. (SHSE:688573) should be aware of the most powerful shareholder groups. With 41% stake, individual insiders 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.

As a result, insiders scored the highest last week as the company hit CN¥2.2b market cap following a 29% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Shenzhen Xinyuren Technology.

What Does The Institutional Ownership Tell Us About Shenzhen Xinyuren Technology?

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 Shenzhen Xinyuren Technology does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Shenzhen Xinyuren Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Shenzhen Xinyuren Technology. The company's CEO Zhiming Yang is the largest shareholder with 30% of shares outstanding. Fang Zeng is the second largest shareholder owning 11% of common stock, and Shenzhen Guozhong Venture Capital Management Co., Ltd. holds about 6.9% of the company stock. Interestingly, the second-largest shareholder, Fang Zeng is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Shenzhen Xinyuren Technology

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. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Shenzhen Xinyuren Technology Co., Ltd.. Insiders own CN¥909m worth of shares in the CN¥2.2b company. 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 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Xinyuren Technology. 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 6.9%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 5.0%, of the Shenzhen Xinyuren Technology stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen Xinyuren Technology better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Shenzhen Xinyuren Technology (including 2 which are concerning) .

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.