Ferrotec (An Hui) Technology Development Co.,LTD's (SZSE:301297) market cap surged CN¥626m last week, public companies who have a lot riding on the company were rewarded

Key Insights

• Significant control over Ferrotec (An Hui) Technology DevelopmentLTD by public companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is Ferrotec Holdings Corporation with a 50% stake
• Institutions own 14% of Ferrotec (An Hui) Technology DevelopmentLTD

To get a sense of who is truly in control of Ferrotec (An Hui) Technology Development Co.,LTD (SZSE:301297), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 53% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies were the biggest beneficiaries of last week’s 8.5% gain.

In the chart below, we zoom in on the different ownership groups of Ferrotec (An Hui) Technology DevelopmentLTD.

Check out our latest analysis for Ferrotec (An Hui) Technology DevelopmentLTD

What Does The Institutional Ownership Tell Us About Ferrotec (An Hui) Technology DevelopmentLTD?

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 Ferrotec (An Hui) Technology DevelopmentLTD does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Ferrotec (An Hui) Technology DevelopmentLTD's historic earnings and revenue below, but keep in mind there's always more to the story.

Ferrotec (An Hui) Technology DevelopmentLTD is not owned by hedge funds. Ferrotec Holdings Corporation is currently the company's largest shareholder with 50% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 5.9% of the shares outstanding, followed by an ownership of 3.6% by the third-largest shareholder.

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. 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 Ferrotec (An Hui) Technology DevelopmentLTD

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Ferrotec (An Hui) Technology DevelopmentLTD. 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. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

It appears to us that public companies own 53% of Ferrotec (An Hui) Technology DevelopmentLTD. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.