Zhuzhou Hongda Electronics Corp.,Ltd. (SZSE:300726) CEO Chen Zeng's holdings dropped 4.2% in value as a result of the recent pullback

Key Insights

• Zhuzhou Hongda ElectronicsLtd's significant insider ownership suggests inherent interests in company's expansion
• 64% of the business is held by the top 2 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Zhuzhou Hongda Electronics Corp.,Ltd. (SZSE:300726), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, insiders endured the biggest losses as the stock fell by 4.2%.

Let's take a closer look to see what the different types of shareholders can tell us about Zhuzhou Hongda ElectronicsLtd.

Check out our latest analysis for Zhuzhou Hongda ElectronicsLtd

What Does The Institutional Ownership Tell Us About Zhuzhou Hongda ElectronicsLtd?

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.

Zhuzhou Hongda ElectronicsLtd 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Zhuzhou Hongda ElectronicsLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Zhuzhou Hongda ElectronicsLtd is not owned by hedge funds. The company's CEO Chen Zeng is the largest shareholder with 34% of shares outstanding. Ruo Nong Zhong is the second largest shareholder owning 30% of common stock, and Ji Jiang Zeng holds about 5.1% of the company stock.

After doing some more digging, we found that the top 2 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Zhuzhou Hongda ElectronicsLtd

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.

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.

It seems that insiders own more than half the Zhuzhou Hongda Electronics Corp.,Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful CN¥9.0b stake in this CN¥13b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public-- including retail investors -- own 22% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhuzhou Hongda ElectronicsLtd better, we need to consider many other factors. Take risks for example - Zhuzhou Hongda ElectronicsLtd has 4 warning signs we think 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.