Fujian Torch Electron Technology Co., Ltd.'s (SHSE:603678) market cap increased by CN¥957m, insiders receive a 42% cut

Key Insights

• Significant insider control over Fujian Torch Electron Technology implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 52% ownership
• 21% of Fujian Torch Electron Technology is held by Institutions

To get a sense of who is truly in control of Fujian Torch Electron Technology Co., Ltd. (SHSE:603678), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 42% to be precise, is individual insiders. 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¥957m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Fujian Torch Electron Technology.

Check out our latest analysis for Fujian Torch Electron Technology

What Does The Institutional Ownership Tell Us About Fujian Torch Electron 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.

As you can see, institutional investors have a fair amount of stake in Fujian Torch Electron Technology. 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 Fujian Torch Electron Technology's earnings history below. Of course, the future is what really matters.

Fujian Torch Electron Technology is not owned by hedge funds. The company's largest shareholder is Mingtong Cai, with ownership of 37%. In comparison, the second and third largest shareholders hold about 7.2% and 5.5% of the stock. JinJun Cai, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Fujian Torch Electron Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Fujian Torch Electron Technology Co., Ltd.. It has a market capitalization of just CN¥15b, and insiders have CN¥6.2b worth of shares in their own names. That's quite significant. 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

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fujian Torch Electron Technology. 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 Fujian Torch Electron Technology better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Fujian Torch Electron Technology you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.