Guoguang Electric Co.,Ltd.Chengdu's (SHSE:688776) top holders are insiders and they are likely disappointed by the recent 5.2% drop

Key Insights

• Significant insider control over Guoguang ElectricLtd.Chengdu implies vested interests in company growth
• 51% of the company is held by a single shareholder (Ya Zhang)
• Institutions own 16% of Guoguang ElectricLtd.Chengdu

If you want to know who really controls Guoguang Electric Co.,Ltd.Chengdu (SHSE:688776), then you'll have to look at the makeup of its share registry. With 51% 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.

As market cap fell to CN¥7.0b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Guoguang ElectricLtd.Chengdu, beginning with the chart below.

See our latest analysis for Guoguang ElectricLtd.Chengdu

What Does The Institutional Ownership Tell Us About Guoguang ElectricLtd.Chengdu?

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.

Guoguang ElectricLtd.Chengdu already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Guoguang ElectricLtd.Chengdu's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Guoguang ElectricLtd.Chengdu. The company's largest shareholder is Ya Zhang, with ownership of 51%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 9.4% and 5.4% of the shares outstanding respectively, Henan Guozhiguang Electronic Information Technology Research and Development Center (LP) and Longcheng (Shenzhen) Asset Management Co., Ltd. are the second and third largest shareholders.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Guoguang ElectricLtd.Chengdu

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.

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.

It seems that insiders own more than half the Guoguang Electric Co.,Ltd.Chengdu stock. This gives them a lot of power. Given it has a market cap of CN¥7.0b, that means they have CN¥3.6b 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

The general public, who are usually individual investors, hold a 16% stake in Guoguang ElectricLtd.Chengdu. 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.

Private Equity Ownership

With a stake of 5.4%, private equity firms could influence the Guoguang ElectricLtd.Chengdu board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 11%, of the Guoguang ElectricLtd.Chengdu stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Guoguang ElectricLtd.Chengdu , and understanding them should be part of your investment process.

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.