Longyan Zhuoyue New Energy Co., Ltd.'s (SHSE:688196) most bullish insider, CEO Huodong Ye must be pleased with the recent 11% gain

Key Insights

• Longyan Zhuoyue New Energy's significant insider ownership suggests inherent interests in company's expansion
• Huodong Ye owns 75% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Longyan Zhuoyue New Energy Co., Ltd. (SHSE:688196), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 75% 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¥5.6b market cap following a 11% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Longyan Zhuoyue New Energy.

Check out our latest analysis for Longyan Zhuoyue New Energy

What Does The Institutional Ownership Tell Us About Longyan Zhuoyue New Energy?

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.

Since institutions own only a small portion of Longyan Zhuoyue New Energy, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Longyan Zhuoyue New Energy. With a 75% stake, CEO Huodong Ye is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. In comparison, the second and third largest shareholders hold about 1.6% and 0.8% of the stock.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Longyan Zhuoyue New Energy

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.

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.

Our most recent data indicates that insiders own the majority of Longyan Zhuoyue New Energy Co., Ltd.. This means they can collectively make decisions for the company. That means they own CN¥4.2b worth of shares in the CN¥5.6b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 21% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Longyan Zhuoyue New Energy better, we need to consider many other factors. Be aware that Longyan Zhuoyue New Energy is showing 4 warning signs in our investment analysis , and 3 of those make us uncomfortable...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.