Wuhan DR Laser Technology Corp.,Ltd's (SZSE:300776) most bullish insider, CEO Zhigang Li must be pleased with the recent 3.1% gain

Key Insights

• Insiders appear to have a vested interest in Wuhan DR Laser TechnologyLtd's growth, as seen by their sizeable ownership
• A total of 3 investors have a majority stake in the company with 54% ownership
• 11% of Wuhan DR Laser TechnologyLtd is held by Institutions

Every investor in Wuhan DR Laser Technology Corp.,Ltd (SZSE:300776) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by CN¥424m last week.

In the chart below, we zoom in on the different ownership groups of Wuhan DR Laser TechnologyLtd.

View our latest analysis for Wuhan DR Laser TechnologyLtd

What Does The Institutional Ownership Tell Us About Wuhan DR Laser TechnologyLtd?

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.

We can see that Wuhan DR Laser TechnologyLtd does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Wuhan DR Laser TechnologyLtd'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 Wuhan DR Laser TechnologyLtd. The company's CEO Zhigang Li is the largest shareholder with 41% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.7% and 4.1% of the stock. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Chairman of Corporate Board, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

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

Insider Ownership Of Wuhan DR Laser TechnologyLtd

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.

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.

Our information suggests that insiders own more than half of Wuhan DR Laser Technology Corp.,Ltd. This gives them effective control of the company. That means insiders have a very meaningful CN¥7.5b stake in this CN¥14b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public-- including retail investors -- own 31% 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 Company Ownership

Our data indicates that Private Companies hold 3.6%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Wuhan DR Laser TechnologyLtd better, we need to consider many other factors. Be aware that Wuhan DR Laser TechnologyLtd is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

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