The recent CN¥444m market cap decrease is likely to have disappointed insiders invested in Neway CNC Equipment (Suzhou) Co., Ltd. (SHSE:688697)

Key Insights

• Insiders appear to have a vested interest in Neway CNC Equipment (Suzhou)'s growth, as seen by their sizeable ownership
• A total of 4 investors have a majority stake in the company with 61% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Neway CNC Equipment (Suzhou) Co., Ltd. (SHSE:688697) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 61% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 7.3% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Neway CNC Equipment (Suzhou).

View our latest analysis for Neway CNC Equipment (Suzhou)

What Does The Institutional Ownership Tell Us About Neway CNC Equipment (Suzhou)?

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.

As you can see, institutional investors have a fair amount of stake in Neway CNC Equipment (Suzhou). 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Neway CNC Equipment (Suzhou)'s earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Neway CNC Equipment (Suzhou). Bin Lu is currently the largest shareholder, with 15% of shares outstanding. The second and third largest shareholders are Chao Xi and Zhangwen Cheng, with an equal amount of shares to their name at 15%.

On looking further, we found that 61% 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Neway CNC Equipment (Suzhou)

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the Neway CNC Equipment (Suzhou) Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥5.7b, that means they have CN¥3.4b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they 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 Neway CNC Equipment (Suzhou). While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 4.5%, of the Neway CNC Equipment (Suzhou) stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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 2 warning signs with Neway CNC Equipment (Suzhou) (at least 1 which shouldn't be ignored) , 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.