Huarui Electrical Appliance Co.,Ltd.'s (SZSE:300626) market cap dropped CN¥140m last week; individual investors who hold 41% were hit as were institutions

Key Insights

• Significant control over Huarui Electrical ApplianceLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 4 shareholders
• Insiders own 25% of Huarui Electrical ApplianceLtd

To get a sense of who is truly in control of Huarui Electrical Appliance Co.,Ltd. (SZSE:300626), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 34% shares weren’t spared from last week’s CN¥140m market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Huarui Electrical ApplianceLtd, beginning with the chart below.

View our latest analysis for Huarui Electrical ApplianceLtd

What Does The Institutional Ownership Tell Us About Huarui Electrical ApplianceLtd?

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.

We can see that Huarui Electrical ApplianceLtd does have institutional investors; and they hold a good portion of the company's stock. 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 Huarui Electrical ApplianceLtd's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Huarui Electrical ApplianceLtd. Looking at our data, we can see that the largest shareholder is Rui Liang Sun with 23% of shares outstanding. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder.

On looking further, we found that 50% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Huarui Electrical ApplianceLtd

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 most recent data indicates that insiders own a reasonable proportion of Huarui Electrical Appliance Co.,Ltd.. Insiders have a CN¥304m stake in this CN¥1.2b business. 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

The general public, who are usually individual investors, hold a 41% stake in Huarui Electrical ApplianceLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Huarui Electrical ApplianceLtd better, we need to consider many other factors. Be aware that Huarui Electrical ApplianceLtd is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com