Recent 18% pullback would hurt ChinaEtek Service & Technology Co., Ltd. (SZSE:301208) insiders

Key Insights

• ChinaEtek Service & Technology's significant insider ownership suggests inherent interests in company's expansion
• 53% of the business is held by the top 4 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of ChinaEtek Service & Technology Co., Ltd. (SZSE:301208) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 65% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders as a group endured the highest losses after market cap fell by CN¥836m.

In the chart below, we zoom in on the different ownership groups of ChinaEtek Service & Technology.

View our latest analysis for ChinaEtek Service & Technology

What Does The Institutional Ownership Tell Us About ChinaEtek Service & Technology?

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.

Institutions have a very small stake in ChinaEtek Service & Technology. 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. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

We note that hedge funds don't have a meaningful investment in ChinaEtek Service & Technology. Looking at our data, we can see that the largest shareholder is Xiao Fei Xu with 17% of shares outstanding. The second and third largest shareholders are Feng Shao and Chuanke Tian, with an equal amount of shares to their name at 12%. Chuanke Tian, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. 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 ChinaEtek Service & Technology

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.

It seems that insiders own more than half the ChinaEtek Service & Technology Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥3.8b, that means they have CN¥2.4b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 33% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand ChinaEtek Service & Technology better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for ChinaEtek Service & Technology you should be aware of, and 2 of them can't be ignored.

Of course this may not be the best stock to buy. So take a peek at this free 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.