China Reinsurance (Group) Corporation's (HKG:1508) institutional investors lost 3.5% last week but have benefitted from longer-term gains

Key Insights

• Given the large stake in the stock by institutions, China Reinsurance (Group)'s stock price might be vulnerable to their trading decisions
• The largest shareholder of the company is Central Huijin Investment Ltd. with a 72% stake
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of China Reinsurance (Group) Corporation (HKG:1508) can tell us which group is most powerful. The group holding the most number of shares in the company, around 74% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors endured the highest losses after the company's market cap fell by HK$1.3b last week. However, the 107% one-year return to shareholders may have helped lessen their pain. But they would probably be wary of future losses.

Let's delve deeper into each type of owner of China Reinsurance (Group), beginning with the chart below.

Check out our latest analysis for China Reinsurance (Group)

What Does The Institutional Ownership Tell Us About China Reinsurance (Group)?

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.

China Reinsurance (Group) already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 China Reinsurance (Group)'s earnings history below. Of course, the future is what really matters.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in China Reinsurance (Group). Central Huijin Investment Ltd. is currently the company's largest shareholder with 72% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Ministry of Finance of the People's Republic of China is the second largest shareholder owning 11% of common stock, and National Council for Social Security Fund holds about 1.3% of the company stock.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of China Reinsurance (Group)

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.

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 note our data does not show any board members holding shares, personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Reinsurance (Group). 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China Reinsurance (Group) better, we need to consider many other factors. Be aware that China Reinsurance (Group) is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.