Sunwoda Electronic Co.,Ltd's (SZSE:300207) stock price dropped 5.0% last week; individual investors would not be happy

Key Insights

• The considerable ownership by individual investors in Sunwoda ElectronicLtd indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 44% of the company
• Insiders own 29% of Sunwoda ElectronicLtd

To get a sense of who is truly in control of Sunwoda Electronic Co.,Ltd (SZSE:300207), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 29% shares weren’t spared from last week’s CN¥2.3b market cap drop, individual investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Sunwoda ElectronicLtd.

Check out our latest analysis for Sunwoda ElectronicLtd

What Does The Institutional Ownership Tell Us About Sunwoda ElectronicLtd?

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 Sunwoda ElectronicLtd does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Sunwoda ElectronicLtd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Sunwoda ElectronicLtd. Looking at our data, we can see that the largest shareholder is Mingwang Wang with 22% of shares outstanding. For context, the second largest shareholder holds about 7.3% of the shares outstanding, followed by an ownership of 2.4% by the third-largest shareholder. Wei Wang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Sunwoda ElectronicLtd

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Sunwoda Electronic Co.,Ltd. It has a market capitalization of just CN¥43b, and insiders have CN¥13b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 54% of Sunwoda ElectronicLtd 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.

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.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.