Key Insights

• The considerable ownership by private companies in China Energy Engineering indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 53% of the company
• 18% of China Energy Engineering is held by Institutions

Every investor in China Energy Engineering Corporation Limited (HKG:3996) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And individual investors on the other hand have a 32% ownership in the company.

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

What Does The Institutional Ownership Tell Us About China Energy Engineering?

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

Hedge funds don't have many shares in China Energy Engineering. Our data shows that China Energy Engineering Group Co., Ltd. is the largest shareholder with 45% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.8% and 3.5% of the stock.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of China Energy Engineering

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. 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.

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 China Energy Engineering Corporation Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own HK$404m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Energy Engineering. 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.

Private Company Ownership

It seems that Private Companies own 50%, of the China Energy Engineering stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Be aware that China Energy Engineering is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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.