Insiders with their considerable ownership were the key benefactors as Hangzhou Huaguang Advanced Welding Materials Co.,Ltd. (SHSE:688379) touches CN¥1.3b market cap

Key Insights

• Insiders appear to have a vested interest in Hangzhou Huaguang Advanced Welding MaterialsLtd's growth, as seen by their sizeable ownership
• The top 3 shareholders own 54% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Hangzhou Huaguang Advanced Welding Materials Co.,Ltd. (SHSE:688379), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 13% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Hangzhou Huaguang Advanced Welding MaterialsLtd.

Check out our latest analysis for Hangzhou Huaguang Advanced Welding MaterialsLtd

What Does The Institutional Ownership Tell Us About Hangzhou Huaguang Advanced Welding MaterialsLtd?

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 Hangzhou Huaguang Advanced Welding MaterialsLtd 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Hangzhou Huaguang Advanced Welding MaterialsLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Hangzhou Huaguang Advanced Welding MaterialsLtd. Looking at our data, we can see that the largest shareholder is Limei Jin with 39% of shares outstanding. Hangzhou Huaguang Investment Co., Ltd. is the second largest shareholder owning 10% of common stock, and Xiaorong Wang holds about 5.6% of the company stock.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Hangzhou Huaguang Advanced Welding MaterialsLtd

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.

It seems insiders own a significant proportion of Hangzhou Huaguang Advanced Welding Materials Co.,Ltd.. Insiders have a CN¥595m stake in this CN¥1.3b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Hangzhou Huaguang Advanced Welding MaterialsLtd. 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.

Private Company Ownership

It seems that Private Companies own 12%, of the Hangzhou Huaguang Advanced Welding MaterialsLtd 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 Hangzhou Huaguang Advanced Welding MaterialsLtd better, we need to consider many other factors. Take risks for example - Hangzhou Huaguang Advanced Welding MaterialsLtd has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.