Key Insights

• Hwatsing Technology's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 6 shareholders own 51% of the company
• Institutions own 37% of Hwatsing Technology

Every investor in Hwatsing Technology Co., Ltd. (SHSE:688120) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 39% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 3.4% increase in the stock price last week, private companies profited the most, but institutions who own 37% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about Hwatsing Technology.

What Does The Institutional Ownership Tell Us About Hwatsing Technology?

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.

We can see that Hwatsing Technology does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hwatsing Technology'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 Hwatsing Technology. Sichuan Development Holding Co.,Ltd. is currently the largest shareholder, with 28% of shares outstanding. With 6.5% and 6.0% of the shares outstanding respectively, Qingjin Houde (Tianjin) Technology Partnership Enterprise (Limited Partnership) and Xinchun Lu are the second and third largest shareholders. Xinchun Lu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Hwatsing Technology

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.

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.

We can see that insiders own shares in Hwatsing Technology Co., Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥1.8b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in Hwatsing Technology. 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 39%, of the Hwatsing Technology 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Hwatsing Technology better, we need to consider many other factors. Be aware that Hwatsing Technology is showing 1 warning sign in our investment analysis , you should know about...

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.

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