Dongfang Electric Corporation Limited's (HKG:1072) largest shareholders are private companies who were rewarded as market cap surged HK$4.4b last week

Key Insights

• Dongfang Electric's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• DongFang Electric Corporation owns 52% of the company
• 10% of Dongfang Electric is held by Institutions

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Every investor in Dongfang Electric Corporation Limited (HKG:1072) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 52% 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 HK$65b market cap following a 9.5% gain in the stock.

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

View our latest analysis for Dongfang Electric

What Does The Institutional Ownership Tell Us About Dongfang Electric?

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.

Dongfang Electric already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Dongfang Electric's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Dongfang Electric. Our data shows that DongFang Electric Corporation is the largest shareholder with 52% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. The second and third largest shareholders are The Vanguard Group, Inc. and Fidelity International Ltd, with an equal amount of shares to their name at 0.6%.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Dongfang Electric

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that Dongfang Electric Corporation Limited insiders own under 1% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own HK$336m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dongfang Electric. 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

It seems that Private Companies own 52%, of the Dongfang Electric stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Dongfang Electric better, we need to consider many other factors. For instance, we've identified 1 warning sign for Dongfang Electric that 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.