Xinyi Energy Holdings Limited's (HKG:3868) last week's 6.8% decline must have disappointed public companies who have a significant stake

Key Insights

• Significant control over Xinyi Energy Holdings by public companies implies that the general public has more power to influence management and governance-related decisions
• 52% of the company is held by a single shareholder (Xinyi Solar Holdings Limited)
• Insiders own 18% of Xinyi Energy Holdings

Every investor in Xinyi Energy Holdings Limited (HKG:3868) should be aware of the most powerful shareholder groups. With 57% stake, public companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 6.8% decrease in the stock price last week, public companies suffered the most losses, but insiders who own 18% stock also took a hit.

Let's delve deeper into each type of owner of Xinyi Energy Holdings, beginning with the chart below.

See our latest analysis for Xinyi Energy Holdings

What Does The Institutional Ownership Tell Us About Xinyi Energy Holdings?

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.

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

We note that hedge funds don't have a meaningful investment in Xinyi Energy Holdings. Our data shows that Xinyi Solar Holdings Limited is the largest shareholder with 52% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Yin Yee Lee is the second largest shareholder owning 8.6% of common stock, and Shanghai Wealspring Asset Management Co., Ltd. holds about 7.0% of the company stock.

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. 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 Xinyi Energy Holdings

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.

It seems insiders own a significant proportion of Xinyi Energy Holdings Limited. It has a market capitalization of just HK$5.7b, and insiders have HK$1.0b worth of shares in their own names. 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

The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

We can see that public companies hold 57% of the Xinyi Energy Holdings 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 Xinyi Energy Holdings better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Xinyi Energy Holdings you should be aware of, and 1 of them is a bit unpleasant.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.