Key Insights

• Guangdong Guanghua Sci-Tech's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 6 shareholders own 51% of the company
• Insiders own 44% of Guangdong Guanghua Sci-Tech

Every investor in Guangdong Guanghua Sci-Tech Co., Ltd. (SZSE:002741) should be aware of the most powerful shareholder groups. With 45% stake, retail investors 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 retail investors were the group that reaped the most benefits after last week's 17% price gain, insiders also received a 44% cut.

In the chart below, we zoom in on the different ownership groups of Guangdong Guanghua Sci-Tech.

What Does The Institutional Ownership Tell Us About Guangdong Guanghua Sci-Tech?

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.

As you can see, institutional investors have a fair amount of stake in Guangdong Guanghua Sci-Tech. 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 Guangdong Guanghua Sci-Tech, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Guangdong Guanghua Sci-Tech. Our data shows that Chuang Fa Zheng is the largest shareholder with 26% of shares outstanding. The second and third largest shareholders are Ren Zheng and Han Zhao Chen, with an equal amount of shares to their name at 6.2%. Two of the top three shareholders happen to be Chief Executive Officer and Chairman of the Board, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Guangdong Guanghua Sci-Tech

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 Guangdong Guanghua Sci-Tech Co., Ltd.. It has a market capitalization of just CN¥5.7b, and insiders have CN¥2.5b worth of shares in their own names. 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

The general public-- including retail investors -- own 45% stake in the company, and hence can't easily be ignored. 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 4.3%, 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. Take risks for example - Guangdong Guanghua Sci-Tech has 2 warning signs (and 1 which is significant) we think you should know about.

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.