SEC Electric Machinery Co., Ltd. (SHSE:603988) insiders, who hold 37% of the firm would be disappointed by the recent pullback

Key Insights

• Insiders appear to have a vested interest in SEC Electric Machinery's growth, as seen by their sizeable ownership
• A total of 3 investors have a majority stake in the company with 60% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in SEC Electric Machinery Co., Ltd. (SHSE:603988) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 37% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥1.9b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of SEC Electric Machinery.

See our latest analysis for SEC Electric Machinery

What Does The Institutional Ownership Tell Us About SEC Electric Machinery?

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.

Institutions have a very small stake in SEC Electric Machinery. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. 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.

SEC Electric Machinery is not owned by hedge funds. The company's largest shareholder is Ningbo Juntuo Enterprise Management Co., Ltd., with ownership of 23%. For context, the second largest shareholder holds about 22% of the shares outstanding, followed by an ownership of 15% by the third-largest shareholder. Jianyu Wang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 60% 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of SEC Electric Machinery

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. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in SEC Electric Machinery Co., Ltd.. Insiders own CN¥697m worth of shares in the CN¥1.9b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over SEC Electric Machinery. 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

Our data indicates that Private Companies hold 23%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand SEC Electric Machinery better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with SEC Electric Machinery (including 2 which are significant) .

Of course this may not be the best stock to buy. So take a peek at this free 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.

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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.