Key Insights

• Significant insider control over Newonder Special ElectricLtd implies vested interests in company growth
• Yong Tan owns 57% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Newonder Special Electric Co.,Ltd (SZSE:301120) should be aware of the most powerful shareholder groups. With 61% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by CN¥371m last week.

Let's delve deeper into each type of owner of Newonder Special ElectricLtd, beginning with the chart below.

See our latest analysis for Newonder Special ElectricLtd

What Does The Institutional Ownership Tell Us About Newonder Special ElectricLtd?

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.

Newonder Special ElectricLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Newonder Special ElectricLtd's 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 Newonder Special ElectricLtd. Our data shows that Yong Tan is the largest shareholder with 57% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 2.4% and 1.9% of the shares outstanding respectively, Peng Li and China Science & Merchants Investment Management Group Co., Ltd. are the second and third largest shareholders. Peng Li, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Newonder Special ElectricLtd

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. 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.

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 that insiders own more than half the Newonder Special Electric Co.,Ltd stock. This gives them a lot of power. Given it has a market cap of CN¥4.3b, that means they have CN¥2.6b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in Newonder Special ElectricLtd. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.