Changgao Electric Group Co., Ltd.'s (SZSE:002452) market cap dropped CN¥613m last week; Individual investors bore the brunt

Key Insights

• Changgao Electric Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 42% of the business is held by the top 25 shareholders
• Insider ownership in Changgao Electric Group is 30%

To get a sense of who is truly in control of Changgao Electric Group Co., Ltd. (SZSE:002452), it is important to understand the ownership structure of the business. With 57% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 12% price drop, insiders with their 30% also suffered.

Let's take a closer look to see what the different types of shareholders can tell us about Changgao Electric Group.

See our latest analysis for Changgao Electric Group

What Does The Institutional Ownership Tell Us About Changgao Electric Group?

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 Changgao Electric Group 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Changgao Electric Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Changgao Electric Group. Our data shows that Xiaowu Ma is the largest shareholder with 14% of shares outstanding. Lin Lin is the second largest shareholder owning 5.1% of common stock, and Junde Liao holds about 4.8% of the company stock. Lin Lin, who is the second-largest shareholder, also happens to hold the title of Secretary. Furthermore, CEO Xiao Ma is the owner of 2.4% of the company's shares.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. 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 Changgao Electric Group

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Changgao Electric Group Co., Ltd.. It has a market capitalization of just CN¥4.4b, and insiders have CN¥1.3b worth of shares in their own names. 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, mostly comprising of individual investors, collectively holds 57% of Changgao Electric Group shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Changgao Electric Group better, we need to consider many other factors. Take risks for example - Changgao Electric Group has 1 warning sign we think you should be aware of.

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.

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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.