The recent 6.4% gain must have brightened CEO Ming Kang Fu's week, Riyue Heavy Industry Co.,Ltd's (SHSE:603218) most bullish insider

Key Insights

• Significant insider control over Riyue Heavy IndustryLtd implies vested interests in company growth
• 51% of the business is held by the top 2 shareholders
• Institutional ownership in Riyue Heavy IndustryLtd is 22%

A look at the shareholders of Riyue Heavy Industry Co.,Ltd (SHSE:603218) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by CN¥758m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Riyue Heavy IndustryLtd.

See our latest analysis for Riyue Heavy IndustryLtd

What Does The Institutional Ownership Tell Us About Riyue Heavy IndustryLtd?

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.

As you can see, institutional investors have a fair amount of stake in Riyue Heavy IndustryLtd. 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 Riyue Heavy IndustryLtd'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 Riyue Heavy IndustryLtd. The company's CEO Ming Kang Fu is the largest shareholder with 39% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 8.9%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Riyue Heavy IndustryLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 own more than half of Riyue Heavy Industry Co.,Ltd. This gives them effective control of the company. Insiders own CN¥6.4b worth of shares in the CN¥13b company. That's extraordinary! Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Riyue Heavy IndustryLtd. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Riyue Heavy IndustryLtd is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

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.