Retail investors among Zhejiang Dehong Automotive Electronic & Electrical Co., Ltd.'s (SHSE:603701) largest stockholders and were hit after last week's 11% price drop

Key Insights

• The considerable ownership by retail investors in Zhejiang Dehong Automotive Electronic & Electrical indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 54% of the company
• Insider ownership in Zhejiang Dehong Automotive Electronic & Electrical is 25%

If you want to know who really controls Zhejiang Dehong Automotive Electronic & Electrical Co., Ltd. (SHSE:603701), 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 retail investors with 31% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥308m.

In the chart below, we zoom in on the different ownership groups of Zhejiang Dehong Automotive Electronic & Electrical.

View our latest analysis for Zhejiang Dehong Automotive Electronic & Electrical

What Does The Institutional Ownership Tell Us About Zhejiang Dehong Automotive Electronic & Electrical?

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 Zhejiang Dehong Automotive Electronic & Electrical does have institutional investors; and they hold a good portion of the company's stock. 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 Zhejiang Dehong Automotive Electronic & Electrical'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 Zhejiang Dehong Automotive Electronic & Electrical. Ningbo Zhenhai Investment Co., Ltd. is currently the company's largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 6.0%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Zhejiang Dehong Automotive Electronic & Electrical

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.

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 insiders own a significant proportion of Zhejiang Dehong Automotive Electronic & Electrical Co., Ltd.. It has a market capitalization of just CN¥2.6b, and insiders have CN¥652m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 31% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Dehong Automotive Electronic & Electrical. 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 Company Ownership

It seems that Private Companies own 30%, of the Zhejiang Dehong Automotive Electronic & Electrical stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Zhejiang Dehong Automotive Electronic & Electrical is showing 1 warning sign in our investment analysis , 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.

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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.