Private companies among Jiangxi Welgao Electronics Co., Ltd.'s (SZSE:301251) largest shareholders, saw gain in holdings value after stock jumped 16% last week

Key Insights

• Significant control over Jiangxi Welgao Electronics by private companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is Jian Jiarun Investment Co., Ltd. with a 51% stake
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Jiangxi Welgao Electronics Co., Ltd. (SZSE:301251), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 58% to be precise, is private companies. 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, private companies collectively scored the highest last week as the company hit CN¥4.6b market cap following a 16% gain in the stock.

Let's delve deeper into each type of owner of Jiangxi Welgao Electronics, beginning with the chart below.

See our latest analysis for Jiangxi Welgao Electronics

What Does The Institutional Ownership Tell Us About Jiangxi Welgao Electronics?

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.

Jiangxi Welgao Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Jiangxi Welgao Electronics' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Jiangxi Welgao Electronics. Looking at our data, we can see that the largest shareholder is Jian Jiarun Investment Co., Ltd. with 51% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Yanqun Deng is the second largest shareholder owning 6.5% of common stock, and Xing Chen holds about 3.0% of the company stock. Xing Chen, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. 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 Jiangxi Welgao Electronics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Jiangxi Welgao Electronics Co., Ltd.. In their own names, insiders own CN¥429m worth of stock in the CN¥4.6b 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, who are usually individual investors, hold a 25% stake in Jiangxi Welgao Electronics. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 58%, of the company's shares. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Jiangxi Welgao Electronics (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.