The recent 33% gain must have brightened Senior Key Executive Lusheng Wang's week, Rongcheer Industrial Technology (Suzhou) Co., Ltd.'s (SZSE:301360) most bullish insider

Key Insights

• Rongcheer Industrial Technology (Suzhou)'s significant insider ownership suggests inherent interests in company's expansion
• The top 4 shareholders own 54% of the company
• Institutions own 11% of Rongcheer Industrial Technology (Suzhou)

If you want to know who really controls Rongcheer Industrial Technology (Suzhou) Co., Ltd. (SZSE:301360), then you'll have to look at the makeup of its share registry. With 59% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week’s 33% gain.

In the chart below, we zoom in on the different ownership groups of Rongcheer Industrial Technology (Suzhou).

Check out our latest analysis for Rongcheer Industrial Technology (Suzhou)

What Does The Institutional Ownership Tell Us About Rongcheer Industrial Technology (Suzhou)?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Rongcheer Industrial Technology (Suzhou) does have institutional investors; and they hold a good portion of the company's stock. 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 Rongcheer Industrial Technology (Suzhou), (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Rongcheer Industrial Technology (Suzhou). Our data suggests that Lusheng Wang, who is also the company's Senior Key Executive, holds the most number of shares at 18%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 13% by the third-largest shareholder. Interestingly, the second and third-largest shareholders also happen to be the Chief Executive Officer and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 4 shareholders control more than half of the company's shares which essentially means that there is concentrated ownership amongst the top shareholders, most of whom happen to be insiders!

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 Rongcheer Industrial Technology (Suzhou)

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders own more than half of Rongcheer Industrial Technology (Suzhou) Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥3.0b, that means they have CN¥1.8b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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

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.

Public Company Ownership

We can see that public companies hold 3.4% of the Rongcheer Industrial Technology (Suzhou) shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. For example, we've discovered 2 warning signs for Rongcheer Industrial Technology (Suzhou) that you should be aware of before investing here.

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.