Wuxi Xinhongye Wire & Cable Co., Ltd.'s (SZSE:301310) most bullish insider, CEO Xiaohua Bu must be pleased with the recent 9.1% gain

Key Insights

• Significant insider control over Wuxi Xinhongye Wire & Cable implies vested interests in company growth
• The top 3 shareholders own 62% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Wuxi Xinhongye Wire & Cable Co., Ltd. (SZSE:301310), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 62% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders scored the highest last week as the company hit CN¥4.4b market cap following a 9.1% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Wuxi Xinhongye Wire & Cable.

View our latest analysis for Wuxi Xinhongye Wire & Cable

What Does The Institutional Ownership Tell Us About Wuxi Xinhongye Wire & Cable?

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 Wuxi Xinhongye Wire & Cable. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Wuxi Xinhongye Wire & Cable, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Wuxi Xinhongye Wire & Cable. With a 22% stake, CEO Xiaohua Bu is the largest shareholder. For context, the second largest shareholder holds about 22% of the shares outstanding, followed by an ownership of 19% by the third-largest shareholder. Note that two of the top three shareholders are also Chief Financial Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Wuxi Xinhongye Wire & Cable

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 that insiders own more than half the Wuxi Xinhongye Wire & Cable Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥4.4b, that means they have CN¥2.8b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in Wuxi Xinhongye Wire & Cable. 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 Company Ownership

It seems that Private Companies own 6.0%, of the Wuxi Xinhongye Wire & Cable stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Wuxi Xinhongye Wire & Cable (1 is a bit unpleasant!) that you should be aware of before investing here.

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.

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

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.