Hong Fang Bichamp Cutting Technology (Hunan) Co., Ltd.'s (SZSE:002843) CEO is the most bullish insider, and their stock value gained 11%last week

Key Insights

• Insiders appear to have a vested interest in Bichamp Cutting Technology (Hunan)'s growth, as seen by their sizeable ownership
• The top 3 shareholders own 51% of the company
• Institutional ownership in Bichamp Cutting Technology (Hunan) is 20%

Every investor in Bichamp Cutting Technology (Hunan) Co., Ltd. (SZSE:002843) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

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

Let's take a closer look to see what the different types of shareholders can tell us about Bichamp Cutting Technology (Hunan).

See our latest analysis for Bichamp Cutting Technology (Hunan)

What Does The Institutional Ownership Tell Us About Bichamp Cutting Technology (Hunan)?

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 Bichamp Cutting Technology (Hunan). 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 Bichamp Cutting Technology (Hunan)'s historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Bichamp Cutting Technology (Hunan). The company's CEO Hong Fang is the largest shareholder with 24% of shares outstanding. Zoomlion Heavy Industry Science and Technology Co., Ltd. is the second largest shareholder owning 20% of common stock, and Shu De Zhao holds about 7.3% of the company stock.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Bichamp Cutting Technology (Hunan)

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.

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 insiders own a significant proportion of Bichamp Cutting Technology (Hunan) Co., Ltd.. Insiders have a CN¥1.5b stake in this CN¥4.7b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

It appears to us that public companies own 20% of Bichamp Cutting Technology (Hunan). It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Bichamp Cutting Technology (Hunan) better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Bichamp Cutting Technology (Hunan) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.