Insiders are the top stockholders in Guangzhou Baiyun Electric Equipment Co., Ltd. (SHSE:603861), and the recent 9.1% drop might have disappointed them

Key Insights

• Significant insider control over Guangzhou Baiyun Electric Equipment implies vested interests in company growth
• The top 4 shareholders own 60% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Guangzhou Baiyun Electric Equipment Co., Ltd. (SHSE:603861), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 66% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 9.1% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Guangzhou Baiyun Electric Equipment.

See our latest analysis for Guangzhou Baiyun Electric Equipment

What Does The Institutional Ownership Tell Us About Guangzhou Baiyun Electric Equipment?

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.

Since institutions own only a small portion of Guangzhou Baiyun Electric Equipment, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Guangzhou Baiyun Electric Equipment is not owned by hedge funds. Our data shows that Ming Hu is the largest shareholder with 17% of shares outstanding. The second and third largest shareholders are Ming Gao Hu and Ming Cong Hu, with an equal amount of shares to their name at 17%. Ming Cong Hu, 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 60% 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Guangzhou Baiyun Electric Equipment

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.

Our most recent data indicates that insiders own the majority of Guangzhou Baiyun Electric Equipment Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥2.4b stake in this CN¥3.7b business. 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-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For instance, we've identified 3 warning signs for Guangzhou Baiyun Electric Equipment (2 can't be ignored) that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.