Private companies in Shenyang Machine Tool Co., Ltd. (SZSE:000410) are its biggest bettors, and their bets paid off as stock gained 6.8% last week

Key Insights

• The considerable ownership by private companies in Shenyang Machine Tool indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 51% of the company
• 14% of Shenyang Machine Tool is held by Institutions

A look at the shareholders of Shenyang Machine Tool Co., Ltd. (SZSE:000410) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, private companies benefitted the most after the company's market cap rose by CN¥867m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Shenyang Machine Tool.

View our latest analysis for Shenyang Machine Tool

What Does The Institutional Ownership Tell Us About Shenyang Machine Tool?

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.

Shenyang Machine Tool already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Shenyang Machine Tool's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Shenyang Machine Tool. China General Technology (Group) Holding Co.,Ltd. is currently the company's largest shareholder with 43% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.1% and 4.0%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shenyang Machine Tool

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

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.

We note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public, who are usually individual investors, hold a 35% stake in Shenyang Machine Tool. 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 Company Ownership

It seems that Private Companies own 50%, of the Shenyang Machine Tool 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenyang Machine Tool better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Shenyang Machine Tool (including 1 which is significant) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.