Insiders were the key beneficiaries as Suzhou Mingzhi Technology Co., Ltd.'s (SHSE:688355) market cap rises to CN¥1.7b

Key Insights

• Suzhou Mingzhi Technology's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 69% of the company
• Institutional ownership in Suzhou Mingzhi Technology is 11%

If you want to know who really controls Suzhou Mingzhi Technology Co., Ltd. (SHSE:688355), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 70% 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 were the biggest beneficiaries of last week’s 11% gain.

In the chart below, we zoom in on the different ownership groups of Suzhou Mingzhi Technology.

Check out our latest analysis for Suzhou Mingzhi Technology

What Does The Institutional Ownership Tell Us About Suzhou Mingzhi Technology?

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 Suzhou Mingzhi Technology 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Suzhou Mingzhi Technology's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Suzhou Mingzhi Technology. Qinfang Wu is currently the company's largest shareholder with 35% of shares outstanding. In comparison, the second and third largest shareholders hold about 35% and 1.5% of the stock. He Qiu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Suzhou Mingzhi Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the Suzhou Mingzhi Technology Co., Ltd. stock. This gives them a lot of power. So they have a CN¥1.2b stake in this CN¥1.7b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 18% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Suzhou Mingzhi Technology better, we need to consider many other factors. Take risks for example - Suzhou Mingzhi Technology has 2 warning signs (and 1 which is potentially serious) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.