Chaowei Power Holdings Limited's (HKG:951) most bullish insider is CEO Mingming Zhou, and their holdings value went up by 12% last week

By
Simply Wall St
Published
January 18, 2022
SEHK:951
Source: Shutterstock

Every investor in Chaowei Power Holdings Limited (HKG:951) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 46% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 12% gain.

In the chart below, we zoom in on the different ownership groups of Chaowei Power Holdings.

See our latest analysis for Chaowei Power Holdings

ownership-breakdown
SEHK:951 Ownership Breakdown January 18th 2022

What Does The Institutional Ownership Tell Us About Chaowei Power Holdings?

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 Chaowei Power Holdings. 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 Chaowei Power Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SEHK:951 Earnings and Revenue Growth January 18th 2022

Hedge funds don't have many shares in Chaowei Power Holdings. Looking at our data, we can see that the largest shareholder is the CEO Mingming Zhou with 27% of shares outstanding. The second and third largest shareholders are Tianneng Power International Limited and Jianjun Fang, with an equal amount of shares to their name at 10%. Interestingly, the third-largest shareholder, Jianjun Fang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Chaowei Power Holdings

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.

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.

Our information suggests that insiders maintain a significant holding in Chaowei Power Holdings Limited. Insiders own HK$1.2b worth of shares in the HK$2.6b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Chaowei Power Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 10% of the Chaowei Power Holdings shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Chaowei Power Holdings is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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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