Key Insights

• The considerable ownership by public companies in Ferrotec (An Hui) Technology DevelopmentLTD indicates that they collectively have a greater say in management and business strategy
• Ferrotec Holdings Corporation owns 50% of the company
• 14% of Ferrotec (An Hui) Technology DevelopmentLTD is held by Institutions

A look at the shareholders of Ferrotec (An Hui) Technology Development Co.,LTD (SZSE:301297) can tell us which group is most powerful. The group holding the most number of shares in the company, around 53% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 11% decline in share price, public companies suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Ferrotec (An Hui) Technology DevelopmentLTD.

Check out our latest analysis for Ferrotec (An Hui) Technology DevelopmentLTD

What Does The Institutional Ownership Tell Us About Ferrotec (An Hui) Technology DevelopmentLTD?

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 Ferrotec (An Hui) Technology DevelopmentLTD. 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 Ferrotec (An Hui) Technology DevelopmentLTD, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ferrotec (An Hui) Technology DevelopmentLTD. The company's largest shareholder is Ferrotec Holdings Corporation, with ownership of 50%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 5.9% of the shares outstanding, followed by an ownership of 3.6% by the third-largest shareholder.

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 Ferrotec (An Hui) Technology DevelopmentLTD

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

We note our data does not show any board members holding shares, personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ferrotec (An Hui) Technology DevelopmentLTD. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 11%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 53% of Ferrotec (An Hui) Technology DevelopmentLTD. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Ferrotec (An Hui) Technology DevelopmentLTD , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.