Insiders were the biggest winners as Leader Harmonious Drive Systems Co., Ltd.'s (SHSE:688017) market cap grew by CN¥1.0b last week

Key Insights

• Insiders appear to have a vested interest in Leader Harmonious Drive Systems' growth, as seen by their sizeable ownership
• The top 5 shareholders own 51% of the company
• 23% of Leader Harmonious Drive Systems is held by Institutions

A look at the shareholders of Leader Harmonious Drive Systems Co., Ltd. (SHSE:688017) can tell us which group is most powerful. The group holding the most number of shares in the company, around 46% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 5.5% gain.

Let's delve deeper into each type of owner of Leader Harmonious Drive Systems, beginning with the chart below.

See our latest analysis for Leader Harmonious Drive Systems

What Does The Institutional Ownership Tell Us About Leader Harmonious Drive Systems?

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.

We can see that Leader Harmonious Drive Systems does have institutional investors; and they hold a good portion of the company's stock. 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 Leader Harmonious Drive Systems' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Leader Harmonious Drive Systems. Jing Zuo is currently the largest shareholder, with 20% of shares outstanding. With 20% and 4.8% of the shares outstanding respectively, Yuyu Zuo and SDIC Innovation Investment Management Co., Ltd. are the second and third largest shareholders.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Leader Harmonious Drive Systems

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Leader Harmonious Drive Systems Co., Ltd.. It has a market capitalization of just CN¥20b, and insiders have CN¥9.0b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Leader Harmonious Drive Systems (1 is a bit unpleasant) that you should be aware of.

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.