Hootech Inc.'s (SZSE:301026) market cap up CN¥673m last week, benefiting both retail investors who own 49% as well as insiders

Key Insights

• The considerable ownership by retail investors in Hootech indicates that they collectively have a greater say in management and business strategy
• A total of 11 investors have a majority stake in the company with 50% ownership
• Insiders own 45% of Hootech

If you want to know who really controls Hootech Inc. (SZSE:301026), then you'll have to look at the makeup of its share registry. With 49% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 24% increase in the stock price last week, retail investors profited the most, but insiders who own 45% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Hootech.

View our latest analysis for Hootech

What Does The Institutional Ownership Tell Us About Hootech?

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.

Institutions have a very small stake in Hootech. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hootech is not owned by hedge funds. Jun Xia is currently the largest shareholder, with 39% of shares outstanding. For context, the second largest shareholder holds about 2.4% of the shares outstanding, followed by an ownership of 1.6% by the third-largest shareholder. Additionally, the company's CEO Ruili Wang directly holds 1.2% of the total shares outstanding.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hootech

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Hootech Inc.. Insiders own CN¥1.6b worth of shares in the CN¥3.5b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 49% stake in Hootech. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hootech better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Hootech you should be aware of, and 1 of them shouldn't be ignored.

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.