Retail investors invested in Houpu Clean Energy Group Co., Ltd. (SZSE:300471) copped the brunt of last week's CN¥477m market cap decline

Key Insights

• Significant control over Houpu Clean Energy Group by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 22 investors have a majority stake in the company with 45% ownership
• Insiders own 20% of Houpu Clean Energy Group

To get a sense of who is truly in control of Houpu Clean Energy Group Co., Ltd. (SZSE:300471), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 55% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 13% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 20% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Houpu Clean Energy Group.

Check out our latest analysis for Houpu Clean Energy Group

What Does The Institutional Ownership Tell Us About Houpu Clean Energy Group?

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.

Houpu Clean Energy Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Houpu Clean Energy Group's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Houpu Clean Energy Group. With a 14% stake, CEO Jiwen Wang is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 14% and 5.2%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 22 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Houpu Clean Energy Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 a reasonable proportion of Houpu Clean Energy Group Co., Ltd.. Insiders have a CN¥667m stake in this CN¥3.3b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 55% of Houpu Clean Energy Group shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 20%, 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Houpu Clean Energy Group that you should be aware of.

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.