Shanghai Laimu Electronics Co.,Ltd.'s (SHSE:603633) market cap rose CN¥333m last week; individual investors who hold 51% profited and so did insiders

Key Insights

• Significant control over Shanghai Laimu ElectronicsLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 49% ownership
• 28% of Shanghai Laimu ElectronicsLtd is held by insiders

To get a sense of who is truly in control of Shanghai Laimu Electronics Co.,Ltd. (SHSE:603633), it is important to understand the ownership structure of the business. With 51% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that benefitted the most from last week’s CN¥333m market cap gain, insiders too had a 28% share in those profits.

Let's delve deeper into each type of owner of Shanghai Laimu ElectronicsLtd, beginning with the chart below.

View our latest analysis for Shanghai Laimu ElectronicsLtd

What Does The Institutional Ownership Tell Us About Shanghai Laimu ElectronicsLtd?

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.

We can see that Shanghai Laimu ElectronicsLtd 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Shanghai Laimu ElectronicsLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Shanghai Laimu ElectronicsLtd is not owned by hedge funds. Pei Fang is currently the company's largest shareholder with 17% of shares outstanding. Xin Ai Zhu is the second largest shareholder owning 9.2% of common stock, and Shanghai Guiwei Investment Consulting Co., Ltd. holds about 6.1% of the company stock. Xin Ai Zhu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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.

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 Shanghai Laimu ElectronicsLtd

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.

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.

It seems insiders own a significant proportion of Shanghai Laimu Electronics Co.,Ltd.. Insiders have a CN¥967m stake in this CN¥3.5b 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, mostly comprising of individual investors, collectively holds 51% of Shanghai Laimu ElectronicsLtd shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Equity Ownership

Private equity firms hold a 5.9% stake in Shanghai Laimu ElectronicsLtd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 6.8%, 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:

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 Shanghai Laimu ElectronicsLtd .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.