Wuhan Huazhong Numerical Control Co.,Ltd.'s (SZSE:300161) biggest owners are retail investors who got richer after stock soared 6.9% last week

Key Insights

• The considerable ownership by retail investors in Wuhan Huazhong Numerical ControlLtd indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 8 shareholders
• Institutions own 22% of Wuhan Huazhong Numerical ControlLtd

Every investor in Wuhan Huazhong Numerical Control Co.,Ltd. (SZSE:300161) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 37% 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, retail investors collectively scored the highest last week as the company hit CN¥5.9b market cap following a 6.9% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Wuhan Huazhong Numerical ControlLtd.

View our latest analysis for Wuhan Huazhong Numerical ControlLtd

What Does The Institutional Ownership Tell Us About Wuhan Huazhong Numerical ControlLtd?

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 Huazhong Numerical ControlLtd does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Huazhong Numerical ControlLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Wuhan Huazhong Numerical ControlLtd. Looking at our data, we can see that the largest shareholder is Zall Intelligent Manufacturing Group Co., Ltd. with 28% of shares outstanding. Invesco Great Wall Fund Management Co. Ltd is the second largest shareholder owning 4.7% of common stock, and Zhi Yan holds about 4.3% of the company stock.

We did some more digging and found that 8 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Wuhan Huazhong Numerical ControlLtd

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.

Shareholders would probably be interested to learn that insiders own shares in Wuhan Huazhong Numerical Control Co.,Ltd.. In their own names, insiders own CN¥401m worth of stock in the CN¥5.9b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 37% 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

We can see that Private Companies own 34%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Wuhan Huazhong Numerical ControlLtd (of which 2 can't be ignored!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.