Individual investors invested in Long Yuan Construction Group Co., Ltd. (SHSE:600491) up 11% last week, insiders too were rewarded

Key Insights

• The considerable ownership by individual investors in Long Yuan Construction Group indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 45% ownership
• 27% of Long Yuan Construction Group is held by insiders

A look at the shareholders of Long Yuan Construction Group Co., Ltd. (SHSE:600491) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 11% increase in the stock price last week, individual investors profited the most, but insiders who own 27% stock also stood to gain from the increase.

Let's delve deeper into each type of owner of Long Yuan Construction Group, beginning with the chart below.

See our latest analysis for Long Yuan Construction Group

What Does The Institutional Ownership Tell Us About Long Yuan Construction Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Long Yuan Construction Group does have institutional investors; and they hold a good portion of the company's stock. 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 Long Yuan Construction Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Long Yuan Construction Group. The company's largest shareholder is Zhenyuan Lai, with ownership of 17%. Hangzhou Communications Investment Group Co.,Ltd. is the second largest shareholder owning 8.4% of common stock, and Chao Hui Lai holds about 7.1% of the company stock. Chao Hui Lai, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Long Yuan Construction Group

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Long Yuan Construction Group Co., Ltd.. Insiders own CN¥1.8b worth of shares in the CN¥6.6b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 55% of Long Yuan Construction Group. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 8.4%, of the Long Yuan Construction Group stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Long Yuan Construction Group that you should be aware of.

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.