Zhejiang Hongxin Technology Co., Ltd. (SZSE:301539) adds CN¥286m in market cap and insiders have a 57% stake in that gain

Key Insights

• Significant insider control over Zhejiang Hongxin Technology implies vested interests in company growth
• The top 3 shareholders own 56% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Zhejiang Hongxin Technology Co., Ltd. (SZSE:301539) should be aware of the most powerful shareholder groups. With 57% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥286m last week.

In the chart below, we zoom in on the different ownership groups of Zhejiang Hongxin Technology.

View our latest analysis for Zhejiang Hongxin Technology

What Does The Institutional Ownership Tell Us About Zhejiang Hongxin Technology?

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 Zhejiang Hongxin Technology, 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.

We note that hedge funds don't have a meaningful investment in Zhejiang Hongxin Technology. The company's largest shareholder is Wenzhi Wang, with ownership of 36%. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 9.5% by the third-largest shareholder.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Zhejiang Hongxin Technology

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.

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 Zhejiang Hongxin Technology Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥3.1b, that means they have CN¥1.8b 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

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Hongxin Technology. 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 18%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Hongxin Technology better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Zhejiang Hongxin Technology (including 1 which shouldn't be ignored) .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.