Far East Smarter Energy Co., Ltd.'s (SHSE:600869) stock price dropped 14% last week; private companies would not be happy

Key Insights

• Significant control over Far East Smarter Energy by private companies implies that the general public has more power to influence management and governance-related decisions
• 55% of the business is held by the top 2 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Far East Smarter Energy Co., Ltd. (SHSE:600869), it is important to understand the ownership structure of the business. With 55% stake, private companies possess the maximum shares in the company. 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 14%.

In the chart below, we zoom in on the different ownership groups of Far East Smarter Energy.

Check out our latest analysis for Far East Smarter Energy

What Does The Institutional Ownership Tell Us About Far East Smarter Energy?

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 Far East Smarter Energy. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Far East Smarter Energy's earnings history below. Of course, the future is what really matters.

Far East Smarter Energy is not owned by hedge funds. The company's largest shareholder is Far East Holding Group Co.,Ltd., with ownership of 48%. With 7.3% and 2.0% of the shares outstanding respectively, Yixing Guoyuan Investment Partnership Enterprise (Limited Partnership) and China Asset Management Co. Ltd. are the second and third largest shareholders.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Far East Smarter Energy

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. 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.

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 data suggests that insiders own under 1% of Far East Smarter Energy Co., Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about CN¥61m worth of stock. This compares to a market capitalization of CN¥6.6b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 35% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 55%, of the Far East Smarter Energy 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Far East Smarter Energy better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Far East Smarter Energy (of which 1 is a bit unpleasant!) you should know about.

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.

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