Henan Shenhuo Coal Industry and Electricity Power Co. Ltd's (SZSE:000933) market cap surged CN¥2.5b last week, retail investors who have a lot riding on the company were rewarded

Key Insights

• Significant control over Henan Shenhuo Coal Industry and Electricity Power by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 12 shareholders
• 28% of Henan Shenhuo Coal Industry and Electricity Power is held by Institutions

A look at the shareholders of Henan Shenhuo Coal Industry and Electricity Power Co. Ltd (SZSE:000933) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors were the biggest beneficiaries of last week’s 5.9% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Henan Shenhuo Coal Industry and Electricity Power.

See our latest analysis for Henan Shenhuo Coal Industry and Electricity Power

What Does The Institutional Ownership Tell Us About Henan Shenhuo Coal Industry and Electricity Power?

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 Henan Shenhuo Coal Industry and Electricity Power does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Henan Shenhuo Coal Industry and Electricity Power, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Henan Shenhuo Coal Industry and Electricity Power. Looking at our data, we can see that the largest shareholder is Henan Shenhuo Group Co., Ltd. with 21% of shares outstanding. For context, the second largest shareholder holds about 8.5% of the shares outstanding, followed by an ownership of 4.2% by the third-largest shareholder.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Henan Shenhuo Coal Industry and Electricity Power

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.

Our data suggests that insiders own under 1% of Henan Shenhuo Coal Industry and Electricity Power Co. Ltd in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥40m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored. 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 34%, of the Henan Shenhuo Coal Industry and Electricity Power stock. 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. Take risks for example - Henan Shenhuo Coal Industry and Electricity Power has 1 warning sign we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.