Retail investors invested in Kennede Electronics MFG. Co., Ltd. (SZSE:002723) up 23% last week, insiders too were rewarded

Key Insights

• Significant control over Kennede Electronics MFG by retail investors implies that the general public has more power to influence management and governance-related decisions
• 43% of the business is held by the top 25 shareholders
• Insiders own 23% of Kennede Electronics MFG

A look at the shareholders of Kennede Electronics MFG. Co., Ltd. (SZSE:002723) can tell us which group is most powerful. The group holding the most number of shares in the company, around 57% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that benefitted the most from last week’s CN¥369m market cap gain, insiders too had a 23% share in those profits.

In the chart below, we zoom in on the different ownership groups of Kennede Electronics MFG.

View our latest analysis for Kennede Electronics MFG

What Does The Lack Of Institutional Ownership Tell Us About Kennede Electronics MFG?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Kennede Electronics MFG, for yourself, below.

Hedge funds don't have many shares in Kennede Electronics MFG. The company's largest shareholder is Xiaorong Jiang, with ownership of 21%. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 2.0% by the third-largest shareholder.

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 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Kennede Electronics MFG

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.

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.

Our information suggests that insiders maintain a significant holding in Kennede Electronics MFG. Co., Ltd.. It has a market capitalization of just CN¥1.9b, and insiders have CN¥443m 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 Kennede Electronics MFG shares. 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.

Private Company Ownership

It seems that Private Companies own 19%, of the Kennede Electronics MFG stock. 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. Take risks for example - Kennede Electronics MFG has 2 warning signs (and 1 which is concerning) we think you should know about.

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.