Institutions profited after Shenyang Fortune Precision Equipment Co., Ltd.'s (SHSE:688409) market cap rose CN¥1.0b last week but private companies profited the most

Key Insights

• The considerable ownership by private companies in Shenyang Fortune Precision Equipment indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 52% of the company
• Institutions own 24% of Shenyang Fortune Precision Equipment

A look at the shareholders of Shenyang Fortune Precision Equipment Co., Ltd. (SHSE:688409) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 41% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Private companies gained the most after market cap touched CN¥19b last week, while institutions who own 24% also benefitted.

Let's delve deeper into each type of owner of Shenyang Fortune Precision Equipment, beginning with the chart below.

See our latest analysis for Shenyang Fortune Precision Equipment

What Does The Institutional Ownership Tell Us About Shenyang Fortune Precision Equipment?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Shenyang Fortune Precision Equipment already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Shenyang Fortune Precision Equipment's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Shenyang Fortune Precision Equipment. The company's largest shareholder is Shenyang Advanced Manufacturing Technology Industry Co., Ltd., with ownership of 17%. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 14% by the third-largest shareholder. Furthermore, CEO Guangwen Zheng is the owner of 4.9% of the company's shares.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Shenyang Fortune Precision Equipment

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Shenyang Fortune Precision Equipment Co., Ltd.. The insiders have a meaningful stake worth CN¥926m. 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

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenyang Fortune Precision Equipment. 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 Equity Ownership

With an ownership of 14%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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

It seems that Private Companies own 41%, of the Shenyang Fortune Precision Equipment 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. Take risks for example - Shenyang Fortune Precision Equipment has 4 warning signs (and 1 which is potentially serious) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.