The recent CN¥466m market cap decrease is likely to have disappointed insiders invested in Hefei Meyer Optoelectronic Technology Inc. (SZSE:002690)

Key Insights

• Insiders appear to have a vested interest in Hefei Meyer Optoelectronic Technology's growth, as seen by their sizeable ownership
• The largest shareholder of the company is Ming Tian with a 61% stake
• Institutions own 13% of Hefei Meyer Optoelectronic Technology

To get a sense of who is truly in control of Hefei Meyer Optoelectronic Technology Inc. (SZSE:002690), it is important to understand the ownership structure of the business. With 68% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 3.3%.

In the chart below, we zoom in on the different ownership groups of Hefei Meyer Optoelectronic Technology.

View our latest analysis for Hefei Meyer Optoelectronic Technology

What Does The Institutional Ownership Tell Us About Hefei Meyer Optoelectronic Technology?

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.

As you can see, institutional investors have a fair amount of stake in Hefei Meyer Optoelectronic Technology. 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 Hefei Meyer Optoelectronic Technology'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 Hefei Meyer Optoelectronic Technology. Ming Tian is currently the company's largest shareholder with 61% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Xianjin Hao is the second largest shareholder owning 3.7% of common stock, and National Council for Social Security Fund holds about 2.9% of the company stock. Xianjin Hao, who is the second-largest shareholder, also happens to hold the title of Other Key Executive. Furthermore, CEO Haibin Shen is the owner of 2.9% of the company's shares.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Hefei Meyer Optoelectronic Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

It seems that insiders own more than half the Hefei Meyer Optoelectronic Technology Inc. stock. This gives them a lot of power. Given it has a market cap of CN¥13b, that means insiders have a whopping CN¥9.2b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Hefei Meyer Optoelectronic Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Hefei Meyer Optoelectronic Technology that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.