Insiders are the top stockholders in Finework (Hu Nan) New Energy Technology Co., Ltd (SZSE:301232), and the recent 24% drop might have disappointed them

Key Insights

• Significant insider control over Finework (Hu Nan) New Energy Technology implies vested interests in company growth
• 54% of the business is held by the top 6 shareholders
• Institutions own 14% of Finework (Hu Nan) New Energy Technology

Every investor in Finework (Hu Nan) New Energy Technology Co., Ltd (SZSE:301232) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 22% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 24% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of Finework (Hu Nan) New Energy Technology, beginning with the chart below.

View our latest analysis for Finework (Hu Nan) New Energy Technology

What Does The Institutional Ownership Tell Us About Finework (Hu Nan) New Energy Technology?

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.

Finework (Hu Nan) New Energy Technology 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 Finework (Hu Nan) New Energy Technology'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 Finework (Hu Nan) New Energy Technology. Looking at our data, we can see that the largest shareholder is Youjun Zhang with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.9% and 6.7%, of the shares outstanding, respectively. Jie Liu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Finework (Hu Nan) New Energy Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Finework (Hu Nan) New Energy Technology Co., Ltd. Insiders have a CN¥435m stake in this CN¥2.0b 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 20% stake in Finework (Hu Nan) New Energy Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With an ownership of 4.0%, 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

Our data indicates that Private Companies hold 11%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Finework (Hu Nan) New Energy Technology (at least 3 which are potentially serious) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free 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.