Retail investors invested in Beijing Emerging Eastern Aviation Equipment Co., Ltd. (SZSE:002933) copped the brunt of last week's CN¥584m market cap decline

Key Insights

• The considerable ownership by retail investors in Beijing Emerging Eastern Aviation Equipment indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 7 shareholders
• Insider ownership in Beijing Emerging Eastern Aviation Equipment is 26%

Every investor in Beijing Emerging Eastern Aviation Equipment Co., Ltd. (SZSE:002933) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 13% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 26% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Beijing Emerging Eastern Aviation Equipment.

View our latest analysis for Beijing Emerging Eastern Aviation Equipment

What Does The Institutional Ownership Tell Us About Beijing Emerging Eastern Aviation Equipment?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Beijing Emerging Eastern Aviation Equipment. 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. 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 Beijing Emerging Eastern Aviation Equipment's earnings history below. Of course, the future is what really matters.

Beijing Emerging Eastern Aviation Equipment is not owned by hedge funds. Chang'an Huitong Co.,Ltd. is currently the largest shareholder, with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 18% and 3.7%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. 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 Beijing Emerging Eastern Aviation Equipment

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.

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 Beijing Emerging Eastern Aviation Equipment Co., Ltd.. It has a market capitalization of just CN¥3.9b, and insiders have CN¥1.0b 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-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 21%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Beijing Emerging Eastern Aviation Equipment (at least 1 which is significant) , and understanding them should be part of your investment process.

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.