Hebei Broadcasting Wireless Media Co., Ltd.'s (SZSE:301551) stock price dropped 6.6% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in Hebei Broadcasting Wireless Media indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 61% ownership
• Institutional ownership in Hebei Broadcasting Wireless Media is 11%

If you want to know who really controls Hebei Broadcasting Wireless Media Co., Ltd. (SZSE:301551), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥1.4b.

Let's take a closer look to see what the different types of shareholders can tell us about Hebei Broadcasting Wireless Media.

See our latest analysis for Hebei Broadcasting Wireless Media

What Does The Institutional Ownership Tell Us About Hebei Broadcasting Wireless Media?

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 Hebei Broadcasting Wireless Media 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. 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 Hebei Broadcasting Wireless Media's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Hebei Broadcasting Wireless Media. Our data shows that Hebei Radio And Television Media Group Co., Ltd. is the largest shareholder with 45% of shares outstanding. Hebei Radio and Television Equity Investment Fund Management Co., Ltd. is the second largest shareholder owning 16% of common stock, and Zhongcai Financial Holding Investment Ltd. holds about 11% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Hebei Broadcasting Wireless Media

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data cannot confirm that board members are holding shares personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Hebei Broadcasting Wireless Media. 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 Equity Ownership

Private equity firms hold a 27% stake in Hebei Broadcasting Wireless Media. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 49%, of the Hebei Broadcasting Wireless Media 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hebei Broadcasting Wireless Media (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

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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.