Key Insights

• The considerable ownership by individual investors in Zhongshan Broad-Ocean Motor indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 49% of the company
• Insider ownership in Zhongshan Broad-Ocean Motor is 38%

A look at the shareholders of Zhongshan Broad-Ocean Motor Co., Ltd. (SZSE:002249) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week's 6.6% price gain, insiders also received a 38% cut.

In the chart below, we zoom in on the different ownership groups of Zhongshan Broad-Ocean Motor.

What Does The Institutional Ownership Tell Us About Zhongshan Broad-Ocean Motor?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Zhongshan Broad-Ocean Motor 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 Zhongshan Broad-Ocean Motor'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 Zhongshan Broad-Ocean Motor. Chuping Lu is currently the largest shareholder, with 26% of shares outstanding. With 5.8% and 2.5% of the shares outstanding respectively, Hai Ming Xu and Jun Gong are the second and third largest shareholders. Hai Ming Xu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. 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 Zhongshan Broad-Ocean Motor

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.

It seems insiders own a significant proportion of Zhongshan Broad-Ocean Motor Co., Ltd.. It has a market capitalization of just CN¥12b, and insiders have CN¥4.7b worth of shares in their own names. That's quite significant. 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

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhongshan Broad-Ocean Motor. 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 3.4%, of the Zhongshan Broad-Ocean Motor stock. 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.

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 1 warning sign for Zhongshan Broad-Ocean Motor that you should be aware of before investing here.

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.