The recent pullback must have dismayed Nanjing Wavelength Opto-Electronic Science & Technology Co.,Ltd. (SZSE:301421) insiders who own 57% of the company

Key Insights

• Significant insider control over Nanjing Wavelength Opto-Electronic Science & TechnologyLtd implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 57% ownership
• Institutional ownership in Nanjing Wavelength Opto-Electronic Science & TechnologyLtd is 16%

A look at the shareholders of Nanjing Wavelength Opto-Electronic Science & Technology Co.,Ltd. (SZSE:301421) can tell us which group is most powerful. With 57% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 9.3% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Nanjing Wavelength Opto-Electronic Science & TechnologyLtd.

See our latest analysis for Nanjing Wavelength Opto-Electronic Science & TechnologyLtd

What Does The Institutional Ownership Tell Us About Nanjing Wavelength Opto-Electronic Science & TechnologyLtd?

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.

As you can see, institutional investors have a fair amount of stake in Nanjing Wavelength Opto-Electronic Science & TechnologyLtd. 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. 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 Nanjing Wavelength Opto-Electronic Science & TechnologyLtd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Nanjing Wavelength Opto-Electronic Science & TechnologyLtd. Looking at our data, we can see that the largest shareholder is Min Zhu with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 19% and 4.5%, of the shares outstanding, respectively. Yutang Wu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Nanjing Wavelength Opto-Electronic Science & TechnologyLtd

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.

Our information suggests that insiders own more than half of Nanjing Wavelength Opto-Electronic Science & Technology Co.,Ltd.. This gives them effective control of the company. So they have a CN¥3.8b stake in this CN¥6.6b business. 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

The general public, who are usually individual investors, hold a 23% stake in Nanjing Wavelength Opto-Electronic Science & TechnologyLtd. 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

It seems that Private Companies own 3.9%, of the Nanjing Wavelength Opto-Electronic Science & TechnologyLtd stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Nanjing Wavelength Opto-Electronic Science & TechnologyLtd better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Nanjing Wavelength Opto-Electronic Science & TechnologyLtd .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.