Key Insights

• Significant insider control over Canggang Railway implies vested interests in company growth
• Yongliang Liu owns 67% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Canggang Railway Limited (HKG:2169) can tell us which group is most powerful. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by HK$1.2b last week.

Let's take a closer look to see what the different types of shareholders can tell us about Canggang Railway.

What Does The Institutional Ownership Tell Us About Canggang Railway?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Since institutions own only a small portion of Canggang Railway, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Canggang Railway. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Canggang Railway's case, its Top Key Executive, Yongliang Liu, is the largest shareholder, holding 67% of shares outstanding. China Life AMP Asset Management Company Limited is the second largest shareholder owning 2.8% of common stock, and Weiming Yi holds about 1.8% of the company stock. Interestingly, the third-largest shareholder, Weiming Yi is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Canggang Railway

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the Canggang Railway Limited stock. This gives them a lot of power. That means they own HK$3.5b worth of shares in the HK$5.0b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Canggang Railway. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. Be aware that Canggang Railway is showing 1 warning sign in our investment analysis , 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.