Private companies in Hubei Donper Electromechanical Group Co., Ltd. (SHSE:601956) are its biggest bettors, and their bets paid off as stock gained 20% last week

Key Insights

• The considerable ownership by private companies in Hubei Donper Electromechanical Group indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 4 shareholders
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Hubei Donper Electromechanical Group Co., Ltd. (SHSE:601956), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies were the biggest beneficiaries of last week’s 20% gain.

Let's delve deeper into each type of owner of Hubei Donper Electromechanical Group, beginning with the chart below.

View our latest analysis for Hubei Donper Electromechanical Group

What Does The Institutional Ownership Tell Us About Hubei Donper Electromechanical Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Hubei Donper Electromechanical 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 Hubei Donper Electromechanical 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 Hubei Donper Electromechanical Group. Looking at our data, we can see that the largest shareholder is Huangshi Huizhi Investment Partnership Enterprise (Limited Partnership) with 47% of shares outstanding. The second and third largest shareholders are JPMorgan Chase & Co, Private Banking and Investment Banking Investments and Jiangsu Jiangsu Lucky Motors Group Co., Ltd., with an equal amount of shares to their name at 1.3%.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. 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 Hubei Donper Electromechanical Group

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 Hubei Donper Electromechanical Group Co., Ltd. in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just CN¥3.2b, and the board has only CN¥11m worth of shares in their own names. 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, who are usually individual investors, hold a 42% stake in Hubei Donper Electromechanical Group. 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 50%, of the Hubei Donper Electromechanical 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. Case in point: We've spotted 2 warning signs for Hubei Donper Electromechanical Group you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.