Dongguan Dingtong Precision Metal Co., Ltd.'s (SHSE:688668) 8.9% loss last week hit both individual investors who own 46% as well as institutions

Key Insights

• Significant control over Dongguan Dingtong Precision Metal by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 3 investors have a majority stake in the company with 53% ownership
• 29% of Dongguan Dingtong Precision Metal is held by Institutions

To get a sense of who is truly in control of Dongguan Dingtong Precision Metal Co., Ltd. (SHSE:688668), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 46% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 8.9% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 29% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Dongguan Dingtong Precision Metal.

Check out our latest analysis for Dongguan Dingtong Precision Metal

What Does The Institutional Ownership Tell Us About Dongguan Dingtong Precision Metal?

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 Dongguan Dingtong Precision Metal does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Dongguan Dingtong Precision Metal's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Dongguan Dingtong Precision Metal. Our data shows that Dongguan Dinghong Junsheng Investment Co., Ltd. is the largest shareholder with 39% of shares outstanding. With 9.6% and 3.8% of the shares outstanding respectively, Chenghai Wang and GF Fund Management Co., Ltd. are the second and third largest shareholders. Chenghai Wang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Dongguan Dingtong Precision Metal

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 some shares in Dongguan Dingtong Precision Metal Co., Ltd.. It has a market capitalization of just CN¥5.3b, and insiders have CN¥513m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Dongguan Dingtong Precision Metal. 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 46%, of the shares on issue. 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:

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 Dongguan Dingtong Precision Metal is showing 4 warning signs in our investment analysis , and 2 of those are a bit concerning...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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