Insiders were the key beneficiaries as Anhui Hyea Aromas Co., Ltd.'s (SZSE:300886) market cap rises to CN¥1.6b

Key Insights

• Insiders appear to have a vested interest in Anhui Hyea Aromas' growth, as seen by their sizeable ownership
• A total of 3 investors have a majority stake in the company with 56% ownership
• 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 Anhui Hyea Aromas Co., Ltd. (SZSE:300886), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 56% 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¥1.6b market cap following a 24% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Anhui Hyea Aromas.

See our latest analysis for Anhui Hyea Aromas

What Does The Institutional Ownership Tell Us About Anhui Hyea Aromas?

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.

We can see that Anhui Hyea Aromas 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. 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 Anhui Hyea Aromas' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Anhui Hyea Aromas. Our data shows that Wenliang Hua is the largest shareholder with 28% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder. Note that the second and third-largest shareholders are also Chief Executive Officer and Member of the Board of Directors, respectively, meaning that the company's top shareholders are insiders.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Anhui Hyea Aromas

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own the majority of Anhui Hyea Aromas Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥875m stake in this CN¥1.6b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in Anhui Hyea Aromas. 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

We can see that Private Companies own 5.6%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Anhui Hyea Aromas (of which 1 is concerning!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.