Public companies in Ferrotec (An Hui) Technology Development Co.,LTD (SZSE:301297) are its biggest bettors, and their bets paid off as stock gained 20% last week

Key Insights

• The considerable ownership by public companies in Ferrotec (An Hui) Technology DevelopmentLTD indicates that they collectively have a greater say in management and business strategy
• 50% of the company is held by a single shareholder (Ferrotec Holdings Corporation)
• 11% of Ferrotec (An Hui) Technology DevelopmentLTD is held by Institutions

If you want to know who really controls Ferrotec (An Hui) Technology Development Co.,LTD (SZSE:301297), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 53% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, public companies collectively scored the highest last week as the company hit CN¥8.5b market cap following a 20% gain in the stock.

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

See 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.

Hedge funds don't have many shares in Ferrotec (An Hui) Technology DevelopmentLTD. Our data shows that Ferrotec Holdings Corporation is the largest shareholder with 50% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 5.9% and 3.0% of the shares outstanding respectively, Shanghai Zuzhen Enterprise Management Center (Limited Partnership) and Shanghai Zezu Enterprise Management Center (Limited Partnership) are the second and third largest shareholders.

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. 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. 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.

We note our data does not show any board members 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-- including retail investors -- own 23% 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 13%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Ferrotec (An Hui) Technology DevelopmentLTD you should know about.

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.

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.