Hunan Yujing Machinery Co.,Ltd's (SZSE:002943) market cap dropped CN¥389m last week; Individual investors bore the brunt

Key Insights

• Hunan Yujing MachineryLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 6 shareholders own 51% of the company
• Insider ownership in Hunan Yujing MachineryLtd is 43%

To get a sense of who is truly in control of Hunan Yujing Machinery Co.,Ltd (SZSE:002943), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders, who own 43% shares weren’t spared from last week’s CN¥389m market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Hunan Yujing MachineryLtd, beginning with the chart below.

Check out our latest analysis for Hunan Yujing MachineryLtd

What Does The Institutional Ownership Tell Us About Hunan Yujing MachineryLtd?

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.

Hunan Yujing MachineryLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Hunan Yujing MachineryLtd'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 Hunan Yujing MachineryLtd. The company's largest shareholder is Yuhong Yang, with ownership of 23%. Jiayu Yang is the second largest shareholder owning 17% of common stock, and Hangzhou Queshi Private Fund Management Co., Ltd. holds about 7.0% of the company stock. Jiayu Yang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. 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 Hunan Yujing MachineryLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Our most recent data indicates that insiders own a reasonable proportion of Hunan Yujing Machinery Co.,Ltd. It has a market capitalization of just CN¥3.7b, and insiders have CN¥1.6b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hunan Yujing MachineryLtd. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Hunan Yujing MachineryLtd you should be aware of, and 3 of them make us uncomfortable.

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.