Retail investors in Weichai Heavy Machinery Co., Ltd. (SZSE:000880) are its biggest bettors, and their bets paid off as stock gained 12% last week

Key Insights

• Weichai Heavy Machinery's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 2 shareholders
• 27% of Weichai Heavy Machinery is held by Institutions

A look at the shareholders of Weichai Heavy Machinery Co., Ltd. (SZSE:000880) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 38% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, retail investors collectively scored the highest last week as the company hit CN¥3.2b market cap following a 12% gain in the stock.

Let's delve deeper into each type of owner of Weichai Heavy Machinery, beginning with the chart below.

See our latest analysis for Weichai Heavy Machinery

What Does The Institutional Ownership Tell Us About Weichai Heavy Machinery?

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 Weichai Heavy Machinery. 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 Weichai Heavy Machinery's earnings history below. Of course, the future is what really matters.

Weichai Heavy Machinery is not owned by hedge funds. Shandong Heavy Industry Group Co., Ltd. is currently the company's largest shareholder with 31% of shares outstanding. With 20% and 4.3% of the shares outstanding respectively, Weifang Investment Corporation Limited and Shandong State-owned Assets Investment Holdings Co., Ltd. are the second and third largest shareholders.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Weichai Heavy Machinery

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.

Our data suggests that insiders own under 1% of Weichai Heavy Machinery Co., Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It appears that the board holds about CN¥18m worth of stock. This compares to a market capitalization of CN¥3.2b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Weichai Heavy Machinery. 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

It seems that Private Companies own 35%, of the Weichai Heavy Machinery 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Weichai Heavy Machinery (of which 1 can't be ignored!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.