The recent CN¥678m market cap decrease is likely to have disappointed insiders invested in Leader Harmonious Drive Systems Co., Ltd. (SHSE:688017)

Key Insights

• Significant insider control over Leader Harmonious Drive Systems implies vested interests in company growth
• 51% of the business is held by the top 5 shareholders
• 26% of Leader Harmonious Drive Systems is held by Institutions

If you want to know who really controls Leader Harmonious Drive Systems Co., Ltd. (SHSE:688017), then you'll have to look at the makeup of its share registry. With 46% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 6.1% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Leader Harmonious Drive Systems.

View our latest analysis for Leader Harmonious Drive Systems

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

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Leader Harmonious Drive Systems. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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.

Leader Harmonious Drive Systems is not owned by hedge funds. Our data shows that Jing Zuo is the largest shareholder with 20% of shares outstanding. In comparison, the second and third largest shareholders hold about 20% and 4.8% of the stock.

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.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Leader Harmonious Drive Systems

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Leader Harmonious Drive Systems Co., Ltd.. Insiders own CN¥4.8b worth of shares in the CN¥10b company. That's quite meaningful. 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

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Leader Harmonious Drive Systems. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Leader Harmonious Drive Systems , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.