Guangdong Dongfang Precision Science & Technology Co., Ltd.'s (SZSE:002611) last week's 8.6% decline must have disappointed retail investors who have a significant stake

Key Insights

• Guangdong Dongfang Precision Science & Technology's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 25 investors have a majority stake in the company with 46% ownership
• Insider ownership in Guangdong Dongfang Precision Science & Technology is 32%

A look at the shareholders of Guangdong Dongfang Precision Science & Technology Co., Ltd. (SZSE:002611) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 32% shares weren’t spared from last week’s CN¥647m market cap drop, retail investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Guangdong Dongfang Precision Science & Technology.

See our latest analysis for Guangdong Dongfang Precision Science & Technology

What Does The Institutional Ownership Tell Us About Guangdong Dongfang Precision Science & Technology?

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 Guangdong Dongfang Precision Science & Technology 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. 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 Guangdong Dongfang Precision Science & Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Guangdong Dongfang Precision Science & Technology is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Zhuolin Tang with 23% of shares outstanding. With 8.1% and 3.0% of the shares outstanding respectively, Zhuo Mian Tang and Pulead Technology Industry Co., Ltd. are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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.

Insider Ownership Of Guangdong Dongfang Precision Science & Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our most recent data indicates that insiders own a reasonable proportion of Guangdong Dongfang Precision Science & Technology Co., Ltd.. Insiders have a CN¥2.2b stake in this CN¥6.9b business. 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

The general public, who are usually individual investors, hold a substantial 54% stake in Guangdong Dongfang Precision Science & Technology, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 8.4%, of the company's shares. 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. To that end, you should be aware of the 2 warning signs we've spotted with Guangdong Dongfang Precision Science & Technology .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.