The recent CN¥335m market cap decrease is likely to have disappointed insiders invested in Chengdu Lihang Technology Co,Ltd. (SHSE:603261)

Key Insights

• Chengdu Lihang Technology CoLtd's significant insider ownership suggests inherent interests in company's expansion
• 63% of the company is held by a single shareholder (Suiyang Liu)
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Chengdu Lihang Technology Co,Ltd. (SHSE:603261), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 66% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders as a group endured the highest losses after market cap fell by CN¥335m.

In the chart below, we zoom in on the different ownership groups of Chengdu Lihang Technology CoLtd.

Check out our latest analysis for Chengdu Lihang Technology CoLtd

What Does The Institutional Ownership Tell Us About Chengdu Lihang Technology CoLtd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Institutions have a very small stake in Chengdu Lihang Technology CoLtd. 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 business gets stronger from here, we could see a situation where more institutions are keen to buy. 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 Chengdu Lihang Technology CoLtd. Suiyang Liu is currently the company's largest shareholder with 63% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Chengdu Ruilian Jiaxin Enterprise Management Consulting Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 2.3% of common stock, and Khorgos Huakong Venture Capital Co., Ltd. holds about 2.0% of the company stock.

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. 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 Chengdu Lihang Technology CoLtd

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 most recent data indicates that insiders own the majority of Chengdu Lihang Technology Co,Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥2.0b, that means they have CN¥1.3b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Chengdu Lihang Technology CoLtd. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Chengdu Lihang Technology CoLtd is showing 1 warning sign in our investment analysis , you should know about...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.