Retail investors invested in Ningbo Lehui International Engineering Equipment Co.,Ltd (SHSE:603076) copped the brunt of last week's CN¥316m market cap decline

Key Insights

• Significant control over Ningbo Lehui International Engineering EquipmentLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 6 investors have a majority stake in the company with 51% ownership
• Insider ownership in Ningbo Lehui International Engineering EquipmentLtd is 21%

To get a sense of who is truly in control of Ningbo Lehui International Engineering Equipment Co.,Ltd (SHSE:603076), it is important to understand the ownership structure of the business. 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).

And last week, retail investors endured the biggest losses as the stock fell by 10%.

Let's delve deeper into each type of owner of Ningbo Lehui International Engineering EquipmentLtd, beginning with the chart below.

Check out our latest analysis for Ningbo Lehui International Engineering EquipmentLtd

What Does The Institutional Ownership Tell Us About Ningbo Lehui International Engineering EquipmentLtd?

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.

Institutions have a very small stake in Ningbo Lehui International Engineering EquipmentLtd. 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. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

We note that hedge funds don't have a meaningful investment in Ningbo Lehui International Engineering EquipmentLtd. The company's largest shareholder is Ningbo Lehui Investment Holding Co., Ltd., with ownership of 18%. The second and third largest shareholders are Yunlian Lai and Yuening Huang, with an equal amount of shares to their name at 10%. Interestingly, the bottom two of the top three shareholders also hold the title of Secretary and Vice Chairman, respectively, suggesting that these insiders have a personal stake in the company.

We also observed that the top 6 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.

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

Insider Ownership Of Ningbo Lehui International Engineering EquipmentLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 insiders maintain a significant holding in Ningbo Lehui International Engineering Equipment Co.,Ltd. Insiders own CN¥599m worth of shares in the CN¥2.8b company. 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 45% 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

We can see that Private Companies own 30%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ningbo Lehui International Engineering EquipmentLtd better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Ningbo Lehui International Engineering EquipmentLtd you should be aware of, and 1 of them is significant.

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.