Individual investors invested in China Water Affairs Group Limited (HKG:855) copped the brunt of last week's HK$636m market cap decline

Key Insights

• China Water Affairs Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 4 shareholders own 51% of the company
• Insiders have been selling lately

To get a sense of who is truly in control of China Water Affairs Group Limited (HKG:855), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 33% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 31% came under pressure after market cap dropped to HK$7.2b last week,individual investors took the most losses.

Let's delve deeper into each type of owner of China Water Affairs Group, beginning with the chart below.

Check out our latest analysis for China Water Affairs Group

What Does The Institutional Ownership Tell Us About China Water Affairs Group?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

China Water Affairs Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 China Water Affairs Group, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in China Water Affairs Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In China Water Affairs Group's case, its Top Key Executive, Chuan Liang Duan, is the largest shareholder, holding 27% of shares outstanding. In comparison, the second and third largest shareholders hold about 18% and 3.7% of the stock.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of China Water Affairs Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in China Water Affairs Group Limited. Insiders own HK$2.3b worth of shares in the HK$7.2b company. 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

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Water Affairs Group. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

We can see that public companies hold 18% of the China Water Affairs Group 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for China Water Affairs Group (1 doesn't sit too well with us!) that you should be aware of before investing here.

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.