Individual investors invested in Avic Aviation High-Technology Co., Ltd. (SHSE:600862) copped the brunt of last week's CN¥2.4b market cap decline

Key Insights

• Significant control over Avic Aviation High-Technology by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 10 investors have a majority stake in the company with 50% ownership
• Institutional ownership in Avic Aviation High-Technology is 14%

If you want to know who really controls Avic Aviation High-Technology Co., Ltd. (SHSE:600862), 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 individual investors with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥30b last week, individual investors 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 Avic Aviation High-Technology.

Check out our latest analysis for Avic Aviation High-Technology

What Does The Institutional Ownership Tell Us About Avic Aviation High-Technology?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Avic Aviation High-Technology. 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. 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 Avic Aviation High-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 Avic Aviation High-Technology. The company's largest shareholder is Aviation Industry Corporation of China,Ltd., with ownership of 37%. AVIC Beijing Institute of Aeronautical Materials is the second largest shareholder owning 3.2% of common stock, and Nantong Industries Holding Group Co.Ltd. holds about 2.2% of the company stock.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Avic Aviation High-Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that Avic Aviation High-Technology Co., Ltd. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. 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¥1.7m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 43% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 43%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Avic Aviation High-Technology better, we need to consider many other factors. For example, we've discovered 1 warning sign for Avic Aviation High-Technology that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.