Key Insights

• Significant insider control over Hebei Keli Automobile Equipment implies vested interests in company growth
• The top 3 shareholders own 68% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Hebei Keli Automobile Equipment Co., Ltd. (SZSE:301552) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. 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¥3.9b market cap following a 12% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Hebei Keli Automobile Equipment.

What Does The Lack Of Institutional Ownership Tell Us About Hebei Keli Automobile Equipment?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Hebei Keli Automobile Equipment's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Hebei Keli Automobile Equipment. Looking at our data, we can see that the largest shareholder is Wanwu Zhang with 29% of shares outstanding. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 19% by the third-largest shareholder. Yanzhi Guo, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Dejiang Yu is the owner of 0.6% of the company's shares.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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

Insider Ownership Of Hebei Keli Automobile Equipment

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

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 the majority of Hebei Keli Automobile Equipment Co., Ltd.. This means they can collectively make decisions for the company. That means they own CN¥2.7b worth of shares in the CN¥3.9b company. That's quite meaningful. 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

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hebei Keli Automobile Equipment. 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.

Private Company Ownership

Our data indicates that Private Companies hold 5.0%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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. For instance, we've identified 1 warning sign for Hebei Keli Automobile Equipment that you should be aware of.

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.