Hefei Metalforming Intelligent Manufacturing Co., Ltd.'s (SHSE:603011) last week's 10% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Hefei Metalforming Intelligent Manufacturing indicates that they collectively have a greater say in management and business strategy
• A total of 7 investors have a majority stake in the company with 51% ownership
• Insider ownership in Hefei Metalforming Intelligent Manufacturing is 33%

To get a sense of who is truly in control of Hefei Metalforming Intelligent Manufacturing Co., Ltd. (SHSE:603011), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 45% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 10% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 33% stock also took a hit.

Let's delve deeper into each type of owner of Hefei Metalforming Intelligent Manufacturing, beginning with the chart below.

Check out our latest analysis for Hefei Metalforming Intelligent Manufacturing

What Does The Institutional Ownership Tell Us About Hefei Metalforming Intelligent Manufacturing?

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.

As you can see, institutional investors have a fair amount of stake in Hefei Metalforming Intelligent Manufacturing. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Hefei Metalforming Intelligent Manufacturing, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Hefei Metalforming Intelligent Manufacturing. The company's largest shareholder is Jianwen Yan, with ownership of 30%. The second and third largest shareholders are Hefei Construction Investment Holding (Group) Co., Ltd. and Hefei Construction Investment & Holding, Investment arm, with an equal amount of shares to their name at 5.2%.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hefei Metalforming Intelligent Manufacturing

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Hefei Metalforming Intelligent Manufacturing Co., Ltd.. It has a market capitalization of just CN¥3.8b, and insiders have CN¥1.3b worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 45% stake in Hefei Metalforming Intelligent Manufacturing. 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

With an ownership of 5.2%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 9.4%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hefei Metalforming Intelligent Manufacturing better, we need to consider many other factors. Be aware that Hefei Metalforming Intelligent Manufacturing is showing 1 warning sign in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.