Private companies are Forehope Electronic (Ningbo) Co., Ltd.'s (SHSE:688362) biggest owners and were rewarded after market cap rose by CN¥1.0b last week

Key Insights

• Significant control over Forehope Electronic (Ningbo) by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 8 shareholders own 52% of the company
• 20% of Forehope Electronic (Ningbo) is held by Institutions

To get a sense of who is truly in control of Forehope Electronic (Ningbo) Co., Ltd. (SHSE:688362), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 40% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private companies benefitted the most after the company's market cap rose by CN¥1.0b last week.

In the chart below, we zoom in on the different ownership groups of Forehope Electronic (Ningbo).

View our latest analysis for Forehope Electronic (Ningbo)

What Does The Institutional Ownership Tell Us About Forehope Electronic (Ningbo)?

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 Forehope Electronic (Ningbo) 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. 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 Forehope Electronic (Ningbo)'s historic earnings and revenue below, but keep in mind there's always more to the story.

Forehope Electronic (Ningbo) is not owned by hedge funds. Our data shows that Zhejiang Yongshunxin Electronics Co., Ltd. is the largest shareholder with 18% of shares outstanding. For context, the second largest shareholder holds about 7.6% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder. Furthermore, CEO Shunbo Wang is the owner of 3.9% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Forehope Electronic (Ningbo)

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.

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.

We can report that insiders do own shares in Forehope Electronic (Ningbo) Co., Ltd.. The insiders have a meaningful stake worth CN¥611m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. 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

With a stake of 5.0%, private equity firms could influence the Forehope Electronic (Ningbo) board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 40%, of the shares on issue. 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.

Public Company Ownership

It appears to us that public companies own 9.6% of Forehope Electronic (Ningbo). We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Forehope Electronic (Ningbo) better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Forehope Electronic (Ningbo) (including 2 which make us uncomfortable) .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.