Beijing Hanyi Innovation Technology Co., Ltd.'s (SZSE:301270) market cap touched CN¥2.4b last week, benefiting both retail investors who own 38% as well as institutions

Key Insights

• The considerable ownership by retail investors in Beijing Hanyi Innovation Technology indicates that they collectively have a greater say in management and business strategy
• The top 14 shareholders own 51% of the company
• 27% of Beijing Hanyi Innovation Technology is held by Institutions

To get a sense of who is truly in control of Beijing Hanyi Innovation Technology Co., Ltd. (SZSE:301270), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 38% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that reaped the most benefits after last week’s 13% price gain, institutions also received a 27% cut.

In the chart below, we zoom in on the different ownership groups of Beijing Hanyi Innovation Technology.

View our latest analysis for Beijing Hanyi Innovation Technology

What Does The Institutional Ownership Tell Us About Beijing Hanyi Innovation Technology?

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 Beijing Hanyi Innovation Technology 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. 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 Beijing Hanyi Innovation Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Beijing Hanyi Innovation Technology. Looking at our data, we can see that the largest shareholder is Beijing Hanyi World Investment Center (Limited Partnership) with 17% of shares outstanding. For context, the second largest shareholder holds about 7.3% of the shares outstanding, followed by an ownership of 3.9% by the third-largest shareholder. Liqun Xie, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 14 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. 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 Beijing Hanyi Innovation Technology

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

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.

Shareholders would probably be interested to learn that insiders own shares in Beijing Hanyi Innovation Technology Co., Ltd.. As individuals, the insiders collectively own CN¥179m worth of the CN¥2.4b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Beijing Hanyi Innovation 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 Company Ownership

We can see that Private Companies own 26%, of the shares on issue. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Beijing Hanyi Innovation Technology (at least 3 which can't be ignored) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.