The recent CN¥395m market cap decrease is likely to have disappointed insiders invested in Wuhan Kotei Informatics Co.,Ltd. (SZSE:301221)

Key Insights

• Wuhan Kotei InformaticsLtd's significant insider ownership suggests inherent interests in company's expansion
• 52% of the business is held by the top 3 shareholders
• Institutions own 13% of Wuhan Kotei InformaticsLtd

To get a sense of who is truly in control of Wuhan Kotei Informatics Co.,Ltd. (SZSE:301221), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, insiders endured the biggest losses as the stock fell by 12%.

Let's delve deeper into each type of owner of Wuhan Kotei InformaticsLtd, beginning with the chart below.

View our latest analysis for Wuhan Kotei InformaticsLtd

What Does The Institutional Ownership Tell Us About Wuhan Kotei InformaticsLtd?

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.

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

Hedge funds don't have many shares in Wuhan Kotei InformaticsLtd. Dunyao Zhu is currently the company's largest shareholder with 42% of shares outstanding. Wuhan Liyuan Qixin Investment Management Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 6.5% of common stock, and Wuhan Dingli Hengfeng Enterprise Management Partnership Enterprise (Limited Partnership) holds about 3.5% of the company stock.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Wuhan Kotei InformaticsLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 insiders own a significant proportion of Wuhan Kotei Informatics Co.,Ltd.. Insiders have a CN¥1.4b stake in this CN¥3.0b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 28% stake in Wuhan Kotei InformaticsLtd. 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 Company Ownership

It seems that Private Companies own 10%, of the Wuhan Kotei InformaticsLtd 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 1 warning sign with Wuhan Kotei InformaticsLtd , and understanding them should be part of your investment process.

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.

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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.