He Qiu Suzhou Mingzhi Technology Co., Ltd.'s (SHSE:688355) CEO is the most bullish insider, and their stock value gained 13%last week

Key Insights

• Suzhou Mingzhi Technology's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 69% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Suzhou Mingzhi Technology Co., Ltd. (SHSE:688355), 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 70% to be precise, is individual insiders. 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¥2.2b market cap following a 13% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Suzhou Mingzhi Technology.

Check out our latest analysis for Suzhou Mingzhi Technology

What Does The Institutional Ownership Tell Us About Suzhou Mingzhi Technology?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Suzhou Mingzhi Technology 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 Suzhou Mingzhi Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

Suzhou Mingzhi Technology is not owned by hedge funds. With a 35% stake, CEO He Qiu is the largest shareholder. For context, the second largest shareholder holds about 35% of the shares outstanding, followed by an ownership of 1.5% by the third-largest shareholder.

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 69% 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Suzhou Mingzhi Technology

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems that insiders own more than half the Suzhou Mingzhi Technology Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥2.2b, that means they have CN¥1.5b worth of shares. 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, who are usually individual investors, hold a 21% stake in Suzhou Mingzhi Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Suzhou Mingzhi Technology (at least 1 which is significant) , and understanding them should be part of your investment process.

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.