While Institutions Invested in Jiangsu Hengli Hydraulic Co.,Ltd (SHSE:601100) Benefited From Last Week's 3.8% Gain, Private Companies Stood to Gain the Most

Simply Wall St ·  Apr 14 21:07

Key Insights

  • Significant control over Jiangsu Hengli HydraulicLtd by private companies implies that the general public has more power to influence management and governance-related decisions
  • 53% of the business is held by the top 2 shareholders
  • Insider ownership in Jiangsu Hengli HydraulicLtd is 16%

If you want to know who really controls Jiangsu Hengli Hydraulic Co.,Ltd (SHSE:601100), then you'll have to look at the makeup of its share registry. With 50% stake, private companies 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.

While private companies were the group that benefitted the most from last week's CN¥2.5b market cap gain, institutions too had a 18% share in those profits.

In the chart below, we zoom in on the different ownership groups of Jiangsu Hengli HydraulicLtd.

SHSE:601100 Ownership Breakdown April 15th 2024

What Does The Institutional Ownership Tell Us About Jiangsu Hengli HydraulicLtd?

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.

Jiangsu Hengli HydraulicLtd 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. 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 Jiangsu Hengli HydraulicLtd, (below). Of course, keep in mind that there are other factors to consider, too.

SHSE:601100 Earnings and Revenue Growth April 15th 2024

Hedge funds don't have many shares in Jiangsu Hengli HydraulicLtd. The company's largest shareholder is Changzhou Hengyi Fluid Technology Ltd., with ownership of 37%. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 13% by the third-largest shareholder.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Jiangsu Hengli HydraulicLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 insiders maintain a significant holding in Jiangsu Hengli Hydraulic Co.,Ltd. Insiders own CN¥12b worth of shares in the CN¥70b company. That's quite meaningful. 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-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 50%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Jiangsu Hengli HydraulicLtd better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Jiangsu Hengli HydraulicLtd you should be aware of, and 1 of them is potentially serious.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

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