Retail investors invested in Zhejiang Dehong Automotive Electronic & Electrical Co., Ltd. (SHSE:603701) copped the brunt of last week's CN¥444m market cap decline

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
• 24% of Zhejiang Dehong Automotive Electronic & Electrical is held by insiders

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. We can see that retail investors own the lion's share in the company with 38% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥3.5b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Dehong Automotive Electronic & Electrical.

Check out 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.

Zhejiang Dehong Automotive Electronic & Electrical already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Zhejiang Dehong Automotive Electronic & Electrical, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Zhejiang Dehong Automotive Electronic & Electrical. Looking at our data, we can see that the largest shareholder is Ningbo Zhenhai Investment Co.,Ltd. with 30% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 6.3% by the third-largest shareholder.

On looking further, we found that 54% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang Dehong Automotive Electronic & Electrical

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.

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 insiders maintain a significant holding in Zhejiang Dehong Automotive Electronic & Electrical Co., Ltd.. Insiders have a CN¥827m stake in this CN¥3.5b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 38% 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.

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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Dehong Automotive Electronic & Electrical better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Zhejiang Dehong Automotive Electronic & Electrical , and understanding them should be part of your investment process.

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.