Key Insights

• Significant insider control over Naipu Mining Machinery implies vested interests in company growth
• Hao Zheng owns 52% of the company
• 11% of Naipu Mining Machinery is held by Institutions

To get a sense of who is truly in control of Naipu Mining Machinery Co., Ltd. (SZSE:300818), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders scored the highest last week as the company hit CN¥4.5b market cap following a 11% gain in the stock.

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

What Does The Institutional Ownership Tell Us About Naipu Mining Machinery?

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.

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

Naipu Mining Machinery is not owned by hedge funds. The company's largest shareholder is Hao Zheng, with ownership of 52%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 5.5% and 3.6% of the shares outstanding respectively, Zhiguo Qu and Huashang Fund Management Company Ltd. are the second and third largest shareholders.

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. 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 Naipu Mining Machinery

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 Naipu Mining Machinery Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥4.5b, that means they have CN¥2.6b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Naipu Mining Machinery better, we need to consider many other factors. Take risks for example - Naipu Mining Machinery has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.