Hangzhou Honghua Digital Technology Stock Company LTD.'s (SHSE:688789) market cap dropped CN¥824m last week; individual investors who hold 38% were hit as were institutions

Key Insights

• Hangzhou Honghua Digital Technology Stock's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 5 shareholders own 54% of the company
• 19% of Hangzhou Honghua Digital Technology Stock is held by Institutions

Every investor in Hangzhou Honghua Digital Technology Stock Company LTD. (SHSE:688789) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 38% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 19% shares weren’t spared from last week’s CN¥824m market cap drop, private companies as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Hangzhou Honghua Digital Technology Stock.

Check out our latest analysis for Hangzhou Honghua Digital Technology Stock

What Does The Institutional Ownership Tell Us About Hangzhou Honghua Digital Technology Stock?

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.

Hangzhou Honghua Digital Technology Stock 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. 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 Hangzhou Honghua Digital Technology Stock's historic earnings and revenue below, but keep in mind there's always more to the story.

Hangzhou Honghua Digital Technology Stock is not owned by hedge funds. The company's largest shareholder is Ningbo Weixin Business Management Partnership Enterprise (Limited Partnership), with ownership of 14%. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 12% by the third-largest shareholder.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Hangzhou Honghua Digital Technology Stock

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in Hangzhou Honghua Digital Technology Stock Company LTD.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥1.3b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hangzhou Honghua Digital Technology Stock. 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

We can see that Private Companies own 38%, of the shares on issue. 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.

Public Company Ownership

It appears to us that public companies own 12% of Hangzhou Honghua Digital Technology Stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. For example, we've discovered 1 warning sign for Hangzhou Honghua Digital Technology Stock that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.