Key Insights

• The considerable ownership by retail investors in Chongqing Fuling Electric Power Industrial indicates that they collectively have a greater say in management and business strategy
• The top 5 shareholders own 50% of the company
• 14% of Chongqing Fuling Electric Power Industrial is held by Institutions

To get a sense of who is truly in control of Chongqing Fuling Electric Power Industrial Co., Ltd. (SHSE:600452), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥15b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Chongqing Fuling Electric Power Industrial.

What Does The Institutional Ownership Tell Us About Chongqing Fuling Electric Power Industrial?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Chongqing Fuling Electric Power Industrial does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Chongqing Fuling Electric Power Industrial's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Chongqing Fuling Electric Power Industrial. The company's largest shareholder is State Grid Corporation of China, with ownership of 42%. National Council for Social Security Fund is the second largest shareholder owning 4.8% of common stock, and New China Life Insurance Co., Ltd., Asset Management Arm holds about 1.6% of the company stock.

On looking further, we found that 50% of the shares are owned by the top 5 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 Chongqing Fuling Electric Power Industrial

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Chongqing Fuling Electric Power Industrial. 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 42%, of the Chongqing Fuling Electric Power Industrial 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Chongqing Fuling Electric Power Industrial better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Chongqing Fuling Electric Power Industrial you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com