Private companies in Chongqing Machinery & Electric Co., Ltd. (HKG:2722) are its biggest bettors, and their bets paid off as stock gained 20% last week

Explore Chongqing Machinery & Electric's Fair Values from the Community and select yours

Key Insights

• Significant control over Chongqing Machinery & Electric by private companies implies that the general public has more power to influence management and governance-related decisions
• 55% of the company is held by a single shareholder (Chongqing Machinery And Electronics Holding (group) Co.,ltd.)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

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A look at the shareholders of Chongqing Machinery & Electric Co., Ltd. (HKG:2722) can tell us which group is most powerful. The group holding the most number of shares in the company, around 55% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies collectively scored the highest last week as the company hit HK$6.9b market cap following a 20% gain in the stock.

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

Check out our latest analysis for Chongqing Machinery & Electric

What Does The Institutional Ownership Tell Us About Chongqing Machinery & Electric?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Chongqing Machinery & 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Chongqing Machinery & Electric's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Chongqing Machinery & Electric. Our data shows that Chongqing Machinery And Electronics Holding (group) Co.,ltd. is the largest shareholder with 55% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. The second and third largest shareholders are Chongqing Construction Engineering Group Corporation Limited and Chongqing Yufu Capital Operation Group Co., Ltd., with an equal amount of shares to their name at 6.3%.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Chongqing Machinery & Electric

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Our data cannot confirm that board members are holding shares personally. We do not see this low level of ownership often, and it is possible our data is imperfect. But shareholders can click here to check if insiders have been selling stock.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Chongqing Machinery & Electric. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 6.3% stake in Chongqing Machinery & Electric. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 55%, of the Chongqing Machinery & 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.

Public Company Ownership

We can see that public companies hold 6.3% of the Chongqing Machinery & Electric shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Chongqing Machinery & Electric better, we need to consider many other factors. For example, we've discovered 1 warning sign for Chongqing Machinery & Electric that you should be aware of before investing here.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.