Key Insights

• Significant control over VNET Group by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 55% of the company
• 13% of VNET Group is held by insiders

If you want to know who really controls VNET Group, Inc. (NASDAQ:VNET), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are public companies with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While public companies were the group that benefitted the most from last week's US$144m market cap gain, institutions too had a 32% share in those profits.

Let's delve deeper into each type of owner of VNET Group, beginning with the chart below.

What Does The Institutional Ownership Tell Us About VNET Group?

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 VNET Group does have institutional investors; and they hold a good portion of the company's stock. 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 VNET Group'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 VNET Group. The company's largest shareholder is Shandong Hi-Speed Holdings Group Limited, with ownership of 41%. For context, the second largest shareholder holds about 8.2% of the shares outstanding, followed by an ownership of 6.0% by the third-largest shareholder. Sheng Chen, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 55% stake.

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 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 VNET Group

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.

Our information suggests that insiders maintain a significant holding in VNET Group, Inc.. Insiders own US$131m worth of shares in the US$1.0b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

It appears to us that public companies own 41% of VNET Group. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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 VNET Group is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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.