Wenzhou Hongfeng Electrical Alloy Co., Ltd. (SZSE:300283) surges 21%; individual investors who own 52% shares profited along with insiders

Key Insights

• The considerable ownership by individual investors in Wenzhou Hongfeng Electrical Alloy indicates that they collectively have a greater say in management and business strategy
• The top 22 shareholders own 48% of the company
• Insiders own 45% of Wenzhou Hongfeng Electrical Alloy

If you want to know who really controls Wenzhou Hongfeng Electrical Alloy Co., Ltd. (SZSE:300283), 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 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched CN¥2.5b last week, while insiders who own 45% also benefitted.

In the chart below, we zoom in on the different ownership groups of Wenzhou Hongfeng Electrical Alloy.

Check out our latest analysis for Wenzhou Hongfeng Electrical Alloy

What Does The Institutional Ownership Tell Us About Wenzhou Hongfeng Electrical Alloy?

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.

Since institutions own only a small portion of Wenzhou Hongfeng Electrical Alloy, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Wenzhou Hongfeng Electrical Alloy is not owned by hedge funds. With a 40% stake, CEO Xiao Chen is the largest shareholder. In comparison, the second and third largest shareholders hold about 3.5% and 1.5% of the stock.

On studying our ownership data, we found that 22 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Wenzhou Hongfeng Electrical Alloy

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Wenzhou Hongfeng Electrical Alloy Co., Ltd.. Insiders have a CN¥1.1b stake in this CN¥2.5b 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 -- including retail investors -- own 52% of Wenzhou Hongfeng Electrical Alloy. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Wenzhou Hongfeng Electrical Alloy better, we need to consider many other factors. Be aware that Wenzhou Hongfeng Electrical Alloy is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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.