Fufeng Group Limited (HKG:546) insiders have recently purchased stock and their bets paid off last week as company hit HK$11b market cap

Key Insights

• Insiders appear to have a vested interest in Fufeng Group's growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 55% ownership
• Recent purchases by insiders

A look at the shareholders of Fufeng Group Limited (HKG:546) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Our data shows that insiders recently bought shares in the company and they were rewarded after market cap rose HK$454m last week.

In the chart below, we zoom in on the different ownership groups of Fufeng Group.

View our latest analysis for Fufeng Group

What Does The Institutional Ownership Tell Us About Fufeng Group?

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.

As you can see, institutional investors have a fair amount of stake in Fufeng Group. 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. 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 Fufeng Group, (below). Of course, keep in mind that there are other factors to consider, too.

Fufeng Group is not owned by hedge funds. Our data suggests that Xuechun Li, who is also the company's Top Key Executive, holds the most number of shares at 40%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Meanwhile, the second and third largest shareholders, hold 15% and 9.0%, of the shares outstanding, respectively. Additionally, the company's CEO Deheng Li directly holds 1.4% of the total shares outstanding.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Fufeng Group

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.

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 most recent data indicates that insiders own a reasonable proportion of Fufeng Group Limited. Insiders own HK$4.9b worth of shares in the HK$11b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fufeng 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.

Private Company Ownership

We can see that Private Companies own 9.0%, of the shares on issue. 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 Fufeng Group better, we need to consider many other factors. Be aware that Fufeng Group is showing 1 warning sign in our investment analysis , you should know about...

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.