Essence Fastening Systems (Shanghai) Co., Ltd.'s (SZSE:301005) most bullish insider is CEO Guangdong Song, and their holdings value went up by 14% last week

Key Insights

• Insiders appear to have a vested interest in Essence Fastening Systems (Shanghai)'s growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 53% ownership
• Institutions own 13% of Essence Fastening Systems (Shanghai)

Every investor in Essence Fastening Systems (Shanghai) Co., Ltd. (SZSE:301005) should be aware of the most powerful shareholder groups. With 52% stake, individual insiders 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.

As a result, insiders scored the highest last week as the company hit CN¥3.2b market cap following a 14% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Essence Fastening Systems (Shanghai).

See our latest analysis for Essence Fastening Systems (Shanghai)

What Does The Institutional Ownership Tell Us About Essence Fastening Systems (Shanghai)?

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.

As you can see, institutional investors have a fair amount of stake in Essence Fastening Systems (Shanghai). 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 Essence Fastening Systems (Shanghai)'s historic earnings and revenue below, but keep in mind there's always more to the story.

Essence Fastening Systems (Shanghai) is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Guangdong Song with 48% of shares outstanding. China Asset Management Co. Ltd. is the second largest shareholder owning 4.9% of common stock, and Shanghai Yuwei Investment Co., Ltd. holds about 3.8% of the company stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Essence Fastening Systems (Shanghai)

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 most recent data indicates that insiders own the majority of Essence Fastening Systems (Shanghai) Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥3.2b, that means they have CN¥1.7b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 31% 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.

Private Company Ownership

It seems that Private Companies own 5.0%, of the Essence Fastening Systems (Shanghai) 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 4 warning signs for Essence Fastening Systems (Shanghai) (1 is concerning!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.