Honghai Cao Wuxi Chemical Equipment Co., Ltd.'s (SZSE:001332) CEO is the most bullish insider, and their stock value gained 13%last week - Simply Wall St News

A look at the shareholders of Wuxi Chemical Equipment Co., Ltd. (SZSE:001332) can tell us which group is most powerful. The group holding the most number of shares in the company, around 75% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit CN¥3.4b market cap following a 13% gain in the stock.

Let's delve deeper into each type of owner of Wuxi Chemical Equipment, beginning with the chart below.

Check out our latest analysis for Wuxi Chemical Equipment

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.

We can see that Wuxi Chemical Equipment does have institutional investors; and they hold a good portion of the company's stock. 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 Wuxi Chemical 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 Wuxi Chemical Equipment. Looking at our data, we can see that the largest shareholder is the CEO Honghai Cao with 59% of shares outstanding. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. The second and third largest shareholders are Xuefeng Shao and Bing Hui, with an equal amount of shares to their name at 8.0%. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 that insiders own more than half the Wuxi Chemical Equipment Co., Ltd. stock. This gives them a lot of power. That means they own CN¥2.5b worth of shares in the CN¥3.4b 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.

The general public, who are usually individual investors, hold a 17% stake in Wuxi Chemical Equipment. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

It's always worth thinking about the different groups who own shares in a company. But to understand Wuxi Chemical Equipment better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Wuxi Chemical Equipment (of which 1 shouldn't be ignored!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Discover if Wuxi Chemical Equipment might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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

Designs, develops, manufactures, and markets metal pressure vessels in China.

Flawless balance sheet and good value.