Hangzhou Huasu Technology Co.,Ltd.'s (SZSE:301157) market cap up CN¥453m last week, benefiting both private companies who own 40% as well as insiders

Key Insights

• Significant control over Hangzhou Huasu TechnologyLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 54% of the company
• Insiders own 26% of Hangzhou Huasu TechnologyLtd

To get a sense of who is truly in control of Hangzhou Huasu Technology Co.,Ltd. (SZSE:301157), it is important to understand the ownership structure of the business. With 40% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 25% increase in the stock price last week, private companies profited the most, but insiders who own 26% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about Hangzhou Huasu TechnologyLtd.

See our latest analysis for Hangzhou Huasu TechnologyLtd

What Does The Institutional Ownership Tell Us About Hangzhou Huasu TechnologyLtd?

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.

Less than 5% of Hangzhou Huasu TechnologyLtd is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Hangzhou Huasu TechnologyLtd. Hangzhou Piqiula Holding Co., Ltd. is currently the largest shareholder, with 37% of shares outstanding. The second and third largest shareholders are Dongqiang Yang and Mingxing Li, with an equal amount of shares to their name at 8.6%. Mingxing Li, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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.

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. 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 Huasu TechnologyLtd

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 insiders own a significant proportion of Hangzhou Huasu Technology Co.,Ltd.. Insiders have a CN¥577m stake in this CN¥2.3b 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

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hangzhou Huasu TechnologyLtd. 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.

Private Equity Ownership

With an ownership of 7.5%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 40%, of the Hangzhou Huasu TechnologyLtd stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Hangzhou Huasu TechnologyLtd (of which 2 shouldn't be ignored!) 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.

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