Xinyi Energy Holdings Limited's (HKG:3868) last week's 7.1% decline must have disappointed public companies who have a significant stake

Key Insights

• Xinyi Energy Holdings' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• Xinyi Solar Holdings Limited owns 52% of the company
• Insider ownership in Xinyi Energy Holdings is 18%

Every investor in Xinyi Energy Holdings Limited (HKG:3868) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 18% came under pressure after market cap dropped to HK$6.6b last week,public companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Xinyi Energy Holdings.

View our latest analysis for Xinyi Energy Holdings

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

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 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. 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 Xinyi Energy Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Xinyi Energy Holdings. Xinyi Solar Holdings Limited is currently the largest shareholder, with 52% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 8.7% of the shares outstanding, followed by an ownership of 6.9% by the third-largest shareholder.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

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.

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 most recent data indicates that insiders own a reasonable proportion of Xinyi Energy Holdings Limited. Insiders have a HK$1.2b stake in this HK$6.6b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 10% stake in Xinyi Energy Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 57% of the Xinyi Energy Holdings shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Xinyi Energy Holdings (of which 1 is concerning!) you should know about.

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.