Retail investors invested in Changshu Fengfan Power Equipment Co., Ltd. (SHSE:601700) copped the brunt of last week's CN¥377m market cap decline

Key Insights

• Significant control over Changshu Fengfan Power Equipment by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 4 investors have a majority stake in the company with 51% ownership
• Insider ownership in Changshu Fengfan Power Equipment is 39%

Every investor in Changshu Fengfan Power Equipment Co., Ltd. (SHSE:601700) should be aware of the most powerful shareholder groups. With 45% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 39% shares weren’t spared from last week’s CN¥377m 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 Changshu Fengfan Power Equipment.

Check out our latest analysis for Changshu Fengfan Power Equipment

What Does The Institutional Ownership Tell Us About Changshu Fengfan Power Equipment?

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.

Institutions have a very small stake in Changshu Fengfan Power Equipment. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Changshu Fengfan Power Equipment is not owned by hedge funds. Jiangang Fang is currently the largest shareholder, with 19% of shares outstanding. Liyi Fan is the second largest shareholder owning 16% of common stock, and Tangshan Financial Industry Incubator Group Co., Ltd. holds about 13% of the company stock. Liyi Fan, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Changshu Fengfan Power Equipment

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Changshu Fengfan Power Equipment Co., Ltd.. Insiders have a CN¥2.0b stake in this CN¥5.3b 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

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Changshu Fengfan Power Equipment. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 13% stake in Changshu Fengfan Power Equipment. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

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 1 warning sign we've spotted with Changshu Fengfan Power Equipment .

Of course this may not be the best stock to buy. So take a peek at this free 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.