Wuxi Huaguang Environment & Energy Group Co.,Ltd.'s (SHSE:600475) market cap dropped CN¥620m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Wuxi Huaguang Environment & Energy GroupLtd indicates that they collectively have a greater say in management and business strategy
• Wuxi Guolian Development (group) Company Limited owns 53% of the company
• Institutions own 12% of Wuxi Huaguang Environment & Energy GroupLtd

Every investor in Wuxi Huaguang Environment & Energy Group Co.,Ltd. (SHSE:600475) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private companies endured the biggest losses as the stock fell by 6.7%.

In the chart below, we zoom in on the different ownership groups of Wuxi Huaguang Environment & Energy GroupLtd.

See our latest analysis for Wuxi Huaguang Environment & Energy GroupLtd

What Does The Institutional Ownership Tell Us About Wuxi Huaguang Environment & Energy GroupLtd?

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.

Wuxi Huaguang Environment & Energy GroupLtd 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. 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 Wuxi Huaguang Environment & Energy GroupLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Wuxi Huaguang Environment & Energy GroupLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Wuxi Guolian Development (group) Company Limited with 53% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Wuxi Huaguang Environment & Energy GroupLtd

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Wuxi Huaguang Environment & Energy GroupLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 15% stake in Wuxi Huaguang Environment & Energy GroupLtd. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 53%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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 3 warning signs for Wuxi Huaguang Environment & Energy GroupLtd (1 shouldn't be ignored!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.