The recent CN¥385m market cap decrease is likely to have disappointed insiders invested in Henan Thinker Automatic Equipment Co.,Ltd. (SHSE:603508)

Key Insights

• Significant insider control over Henan Thinker Automatic EquipmentLtd implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 57% ownership
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Henan Thinker Automatic Equipment Co.,Ltd. (SHSE:603508) should be aware of the most powerful shareholder groups. With 58% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥6.5b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Henan Thinker Automatic EquipmentLtd, beginning with the chart below.

Check out our latest analysis for Henan Thinker Automatic EquipmentLtd

What Does The Institutional Ownership Tell Us About Henan Thinker Automatic EquipmentLtd?

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 Henan Thinker Automatic EquipmentLtd does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Henan Thinker Automatic EquipmentLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Henan Thinker Automatic EquipmentLtd. Our data shows that Jie Guo is the largest shareholder with 20% of shares outstanding. With 14% and 11% of the shares outstanding respectively, Wei Ping Wang and Jianzhou Zhao are the second and third largest shareholders. Jianzhou Zhao, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On looking further, we found that 57% 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Henan Thinker Automatic EquipmentLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that insiders own more than half of Henan Thinker Automatic Equipment Co.,Ltd.. This gives them effective control of the company. That means they own CN¥3.8b worth of shares in the CN¥6.5b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. 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 29% stake in Henan Thinker Automatic EquipmentLtd. 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.

Public Company Ownership

We can see that public companies hold 4.6% of the Henan Thinker Automatic EquipmentLtd shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Henan Thinker Automatic EquipmentLtd better, we need to consider many other factors. Be aware that Henan Thinker Automatic EquipmentLtd is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.