Individual investors are Shenzhen Magic Design & Decoration Engineering Co., Ltd.'s (SZSE:002856) biggest owners and were rewarded after market cap rose by CN¥157m last week

Key Insights

• Significant control over Shenzhen Magic Design & Decoration Engineering by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 11 shareholders
• 14% of Shenzhen Magic Design & Decoration Engineering is held by insiders

Every investor in Shenzhen Magic Design & Decoration Engineering Co., Ltd. (SZSE:002856) should be aware of the most powerful shareholder groups. With 50% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, individual investors collectively scored the highest last week as the company hit CN¥1.7b market cap following a 10% gain in the stock.

Let's delve deeper into each type of owner of Shenzhen Magic Design & Decoration Engineering, beginning with the chart below.

View our latest analysis for Shenzhen Magic Design & Decoration Engineering

What Does The Institutional Ownership Tell Us About Shenzhen Magic Design & Decoration Engineering?

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.

Since institutions own only a small portion of Shenzhen Magic Design & Decoration Engineering, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Shenzhen Magic Design & Decoration Engineering is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Shenzhen Shanhui Investment Management Co., Ltd. with 30% of shares outstanding. In comparison, the second and third largest shareholders hold about 14% and 1.0% of the stock.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Shenzhen Magic Design & Decoration Engineering

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Shenzhen Magic Design & Decoration Engineering Co., Ltd.. Insiders have a CN¥238m stake in this CN¥1.7b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Magic Design & Decoration Engineering. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 30% stake in Shenzhen Magic Design & Decoration Engineering. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

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 2 warning signs for Shenzhen Magic Design & Decoration Engineering that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.