Individual investors among Shanghai Liangxin Electrical Co.,LTD.'s (SZSE:002706) largest stockholders and were hit after last week's 5.0% price drop

Key Insights

• The considerable ownership by individual investors in Shanghai Liangxin ElectricalLTD indicates that they collectively have a greater say in management and business strategy
• 45% of the business is held by the top 25 shareholders
• Insider ownership in Shanghai Liangxin ElectricalLTD is 30%

Every investor in Shanghai Liangxin Electrical Co.,LTD. (SZSE:002706) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 53% to be precise, is individual investors. 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 5.0% price drop, insiders with their 30% also suffered.

In the chart below, we zoom in on the different ownership groups of Shanghai Liangxin ElectricalLTD.

Check out our latest analysis for Shanghai Liangxin ElectricalLTD

What Does The Institutional Ownership Tell Us About Shanghai Liangxin ElectricalLTD?

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.

As you can see, institutional investors have a fair amount of stake in Shanghai Liangxin ElectricalLTD. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Shanghai Liangxin ElectricalLTD, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Shanghai Liangxin ElectricalLTD. Si-Long Ren is currently the company's largest shareholder with 9.6% of shares outstanding. The second and third largest shareholders are Fahui Ding and Jianjun Fan, with an equal amount of shares to their name at 5.2%. Jianjun Fan, who is the third-largest shareholder, also happens to hold the title of Vice Chairman. Additionally, the company's CEO Ping Chen directly holds 4.8% of the total shares outstanding.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Shanghai Liangxin ElectricalLTD

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 Liangxin Electrical Co.,LTD.. It is very interesting to see that insiders have a meaningful CN¥2.2b stake in this CN¥7.4b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 53% of Shanghai Liangxin ElectricalLTD 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.

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. For instance, we've identified 1 warning sign for Shanghai Liangxin ElectricalLTD that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.