Key Insights

• Zhejiang Sanfer Electric's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 55% of the business is held by the top 2 shareholders
• Insiders own 24% of Zhejiang Sanfer Electric

To get a sense of who is truly in control of Zhejiang Sanfer Electric Co., Ltd (SHSE:605336), it is important to understand the ownership structure of the business. With 44% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week's 22% gain.

In the chart below, we zoom in on the different ownership groups of Zhejiang Sanfer Electric.

What Does The Institutional Ownership Tell Us About Zhejiang Sanfer Electric?

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 Zhejiang Sanfer Electric. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Zhejiang Sanfer Electric's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhejiang Sanfer Electric. Zhejiang Sanfer Investment Co., Ltd. is currently the company's largest shareholder with 37% of shares outstanding. Yuji Shao is the second largest shareholder owning 18% of common stock, and Shengzhou Fengfu Investment Management Partnership Enterprise (Limited Partnership) holds about 6.6% of the company stock. Yuji Shao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 2 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. 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 Zhejiang Sanfer Electric

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.

It seems insiders own a significant proportion of Zhejiang Sanfer Electric Co., Ltd. Insiders have a CN¥661m stake in this CN¥2.8b 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 26% stake in Zhejiang Sanfer Electric. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 44%, of the Zhejiang Sanfer Electric stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Sanfer Electric better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Zhejiang Sanfer Electric (including 1 which is a bit concerning) .

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.