Hengtong Optic-Electric Co., Ltd.'s (SHSE:600487) market cap surged CN¥2.2b last week, individual investors who have a lot riding on the company were rewarded

Key Insights

• Significant control over Hengtong Optic-Electric by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 43% of the company
• Institutional ownership in Hengtong Optic-Electric is 15%

If you want to know who really controls Hengtong Optic-Electric Co., Ltd. (SHSE:600487), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors were the biggest beneficiaries of last week’s 5.4% gain.

Let's delve deeper into each type of owner of Hengtong Optic-Electric, beginning with the chart below.

View our latest analysis for Hengtong Optic-Electric

What Does The Institutional Ownership Tell Us About Hengtong Optic-Electric?

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.

As you can see, institutional investors have a fair amount of stake in Hengtong Optic-Electric. 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 Hengtong Optic-Electric's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Hengtong Optic-Electric. Hengtong Group Co.,Ltd is currently the company's largest shareholder with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.9% and 1.5%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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

Insider Ownership Of Hengtong Optic-Electric

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 most recent data indicates that insiders own some shares in Hengtong Optic-Electric Co., Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥1.9b worth of shares (at current prices). 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 53% of Hengtong Optic-Electric. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 27%, of the shares on issue. 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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Hengtong Optic-Electric you should know about.

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.

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.