Retail investors are Hangzhou Zhongheng Electric Co., Ltd's (SZSE:002364) biggest owners and were rewarded after market cap rose by CN¥472m last week

Key Insights

• Significant control over Hangzhou Zhongheng Electric by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 24 investors have a majority stake in the company with 46% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Hangzhou Zhongheng Electric Co., Ltd (SZSE:002364) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors were the biggest beneficiaries of last week’s 11% gain.

In the chart below, we zoom in on the different ownership groups of Hangzhou Zhongheng Electric.

See our latest analysis for Hangzhou Zhongheng Electric

What Does The Institutional Ownership Tell Us About Hangzhou Zhongheng Electric?

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.

Since institutions own only a small portion of Hangzhou Zhongheng Electric, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hangzhou Zhongheng Electric is not owned by hedge funds. Hangzhou Zhongheng Science and Technology Investment Co., Ltd. is currently the company's largest shareholder with 36% of shares outstanding. With 5.9% and 1.1% of the shares outstanding respectively, Guoding Zhu and Yong Hao Zhang are the second and third largest shareholders. Guoding Zhu, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

On studying our ownership data, we found that 24 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Hangzhou Zhongheng Electric

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Hangzhou Zhongheng Electric Co., Ltd. In their own names, insiders own CN¥352m worth of stock in the CN¥4.6b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public -- including retail investors -- own 54% of Hangzhou Zhongheng Electric. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 37%, of the company's shares. 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 Hangzhou Zhongheng Electric better, we need to consider many other factors. Take risks for example - Hangzhou Zhongheng Electric has 3 warning signs (and 1 which can't be ignored) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.