Key Insights

• Zhuzhou Hongda ElectronicsLtd's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 64% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Zhuzhou Hongda Electronics Corp.,Ltd. (SZSE:300726), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 69% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit CN¥9.5b market cap following a 7.3% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Zhuzhou Hongda ElectronicsLtd.

What Does The Institutional Ownership Tell Us About Zhuzhou Hongda ElectronicsLtd?

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.

Zhuzhou Hongda ElectronicsLtd 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. 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 Zhuzhou Hongda ElectronicsLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Zhuzhou Hongda ElectronicsLtd. With a 34% stake, CEO Chen Zeng is the largest shareholder. With 30% and 5.1% of the shares outstanding respectively, Ruo Nong Zhong and Ji Jiang Zeng are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 64% stake.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Zhuzhou Hongda ElectronicsLtd

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.

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.

Our most recent data indicates that insiders own the majority of Zhuzhou Hongda Electronics Corp.,Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥9.5b, that means insiders have a whopping CN¥6.6b worth of shares in their own names. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Zhuzhou Hongda ElectronicsLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhuzhou Hongda ElectronicsLtd better, we need to consider many other factors. For example, we've discovered 4 warning signs for Zhuzhou Hongda ElectronicsLtd that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.