Private companies invested in Shandong Linglong Tyre Co.,Ltd. (SHSE:601966) copped the brunt of last week's CN¥1.8b market cap decline

Key Insights

• The considerable ownership by private companies in Shandong Linglong TyreLtd indicates that they collectively have a greater say in management and business strategy
• 53% of the business is held by the top 2 shareholders
• Institutional ownership in Shandong Linglong TyreLtd is 14%

Every investor in Shandong Linglong Tyre Co.,Ltd. (SHSE:601966) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥29b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Shandong Linglong TyreLtd.

Check out our latest analysis for Shandong Linglong TyreLtd

What Does The Institutional Ownership Tell Us About Shandong Linglong TyreLtd?

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 Shandong Linglong TyreLtd 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Shandong Linglong TyreLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Shandong Linglong TyreLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Linglong Group Co., Ltd. with 39% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 1.6% by the third-largest shareholder.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Shandong Linglong TyreLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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.

Our information suggests that Shandong Linglong Tyre Co.,Ltd. insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥33m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Shandong Linglong TyreLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 54%, of the company's shares. 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:

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. To that end, you should be aware of the 1 warning sign we've spotted with Shandong Linglong TyreLtd .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.