While insiders own 19% of Foshan Haitian Flavouring and Food Company Ltd. (SHSE:603288), private companies are its largest shareholders with 58% ownership

Key Insights

• Significant control over Foshan Haitian Flavouring and Food by private companies implies that the general public has more power to influence management and governance-related decisions
• 58% of the company is held by a single shareholder (Guangdong Haitian Group Co., Ltd.)
• Insider ownership in Foshan Haitian Flavouring and Food is 19%

A look at the shareholders of Foshan Haitian Flavouring and Food Company Ltd. (SHSE:603288) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And individual insiders on the other hand have a 19% ownership in the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

Let's take a closer look to see what the different types of shareholders can tell us about Foshan Haitian Flavouring and Food.

View our latest analysis for Foshan Haitian Flavouring and Food

What Does The Institutional Ownership Tell Us About Foshan Haitian Flavouring and Food?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Foshan Haitian Flavouring and Food. 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 Foshan Haitian Flavouring and Food'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 Foshan Haitian Flavouring and Food. Guangdong Haitian Group Co., Ltd. is currently the largest shareholder, with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 9.6% and 3.2%, of the shares outstanding, respectively. Note that the second and third-largest shareholders are also Chief Executive Officer and Vice Chairman, respectively, meaning that the company's top shareholders are insiders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Foshan Haitian Flavouring and Food

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.

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 Foshan Haitian Flavouring and Food Company Ltd.. It has a market capitalization of just CN¥192b, and insiders have CN¥36b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Foshan Haitian Flavouring and Food. 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

Our data indicates that Private Companies hold 58%, 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.

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 2 warning signs for Foshan Haitian Flavouring and Food (1 is potentially serious) that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com