Key Insights
- Significant control over Shenyang Fortune Precision Equipment by private companies implies that the general public has more power to influence management and governance-related decisions
- 52% of the business is held by the top 4 shareholders
- Institutions own 24% of Shenyang Fortune Precision Equipment
To get a sense of who is truly in control of Shenyang Fortune Precision Equipment Co., Ltd. (SHSE:688409), it is important to understand the ownership structure of the business. With 41% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While private companies were the group that reaped the most benefits after last week's 4.0% price gain, institutions also received a 24% cut.
Let's delve deeper into each type of owner of Shenyang Fortune Precision Equipment, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Shenyang Fortune Precision Equipment?
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 Shenyang Fortune Precision Equipment. 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 Shenyang Fortune Precision Equipment'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 Shenyang Fortune Precision Equipment. The company's largest shareholder is Shenyang Advanced Manufacturing Technology Industry Co., Ltd., with ownership of 17%. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 14% by the third-largest shareholder. Additionally, the company's CEO Guangwen Zheng directly holds 4.8% of the total shares outstanding.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Shenyang Fortune Precision Equipment
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.
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.
Shareholders would probably be interested to learn that insiders own shares in Shenyang Fortune Precision Equipment Co., Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥567m 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 15% stake in Shenyang Fortune Precision Equipment. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Equity Ownership
Private equity firms hold a 14% stake in Shenyang Fortune Precision Equipment. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Private Company Ownership
It seems that Private Companies own 41%, of the Shenyang Fortune Precision Equipment 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Shenyang Fortune Precision Equipment that you should be aware of before investing here.
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.