Hubei Huaqiang High-Tech Co., Ltd.'s (SHSE:688151) market cap dropped CN¥389m last week; individual investors who hold 51% were hit as were institutions

Key Insights

• Hubei Huaqiang High-Tech's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 70% of the business is held by the top 2 shareholders
• 28% of Hubei Huaqiang High-Tech is held by Institutions

If you want to know who really controls Hubei Huaqiang High-Tech Co., Ltd. (SHSE:688151), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 28% came under pressure after market cap dropped to CN¥5.6b last week,private companies took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Hubei Huaqiang High-Tech.

View our latest analysis for Hubei Huaqiang High-Tech

What Does The Institutional Ownership Tell Us About Hubei Huaqiang High-Tech?

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.

As you can see, institutional investors have a fair amount of stake in Hubei Huaqiang High-Tech. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hubei Huaqiang High-Tech's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Hubei Huaqiang High-Tech. Our data shows that China South Industries Group Co.,Ltd. is the largest shareholder with 46% of shares outstanding. In comparison, the second and third largest shareholders hold about 25% and 2.4% of the stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 70% stake.

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 Hubei Huaqiang High-Tech

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Hubei Huaqiang High-Tech. 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

It seems that Private Companies own 51%, of the Hubei Huaqiang High-Tech stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Hubei Huaqiang High-Tech better, we need to consider many other factors. For example, we've discovered 2 warning signs for Hubei Huaqiang High-Tech (1 shouldn't be ignored!) that you should be aware of before investing here.

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.