Key Insights

• Insiders appear to have a vested interest in Shenzhen Etmade Automatic Equipment's growth, as seen by their sizeable ownership
• The top 6 shareholders own 53% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Shenzhen Etmade Automatic Equipment Co., Ltd. (SZSE:300812) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 46% ownership. 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¥2.6b market cap following a 16% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Shenzhen Etmade Automatic Equipment.

What Does The Institutional Ownership Tell Us About Shenzhen Etmade Automatic Equipment?

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.

Shenzhen Etmade Automatic Equipment already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Etmade Automatic Equipment, (below). Of course, keep in mind that there are other factors to consider, too.

Shenzhen Etmade Automatic Equipment is not owned by hedge funds. Minghua Chai is currently the company's largest shareholder with 17% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 8.5% by the third-largest shareholder. Two of the top three shareholders happen to be Chief Executive Officer and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shenzhen Etmade Automatic Equipment

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.

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 most recent data indicates that insiders own a reasonable proportion of Shenzhen Etmade Automatic Equipment Co., Ltd.. Insiders have a CN¥1.2b stake in this CN¥2.6b business. 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

The general public, who are usually individual investors, hold a 38% stake in Shenzhen Etmade Automatic Equipment. 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

Our data indicates that Private Companies hold 7.7%, 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:

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. To that end, you should be aware of the 1 warning sign we've spotted with Shenzhen Etmade Automatic Equipment .

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.