Sichuan Crun Co., Ltd's (SZSE:002272) market cap dropped CN¥298m last week; Retail investors bore the brunt

Key Insights

• The considerable ownership by retail investors in Sichuan Crun indicates that they collectively have a greater say in management and business strategy
• 41% of the business is held by the top 25 shareholders
• Insiders own 29% of Sichuan Crun

If you want to know who really controls Sichuan Crun Co., Ltd (SZSE:002272), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 59% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 29% came under pressure after market cap dropped to CN¥2.4b last week,retail investors took the most losses.

Let's delve deeper into each type of owner of Sichuan Crun, beginning with the chart below.

See our latest analysis for Sichuan Crun

What Does The Institutional Ownership Tell Us About Sichuan Crun?

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.

Sichuan Crun already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Sichuan Crun'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 Sichuan Crun. The company's largest shareholder is Lihua Luo, with ownership of 15%. Ligang Zhong is the second largest shareholder owning 5.8% of common stock, and Yongzhong Luo holds about 5.4% of the company stock. Yongzhong Luo, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Sichuan Crun

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems insiders own a significant proportion of Sichuan Crun Co., Ltd. Insiders own CN¥697m worth of shares in the CN¥2.4b 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 59% of Sichuan Crun. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

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. To that end, you should learn about the 3 warning signs we've spotted with Sichuan Crun (including 2 which are a bit concerning) .

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.