Luoyang Xinqianglian Slewing Bearing Co., Ltd.'s (SZSE:300850) last week's 8.3% decline must have disappointed retail investors who have a significant stake

Key Insights

• Luoyang Xinqianglian Slewing Bearing's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 6 shareholders
• Insider ownership in Luoyang Xinqianglian Slewing Bearing is 36%

To get a sense of who is truly in control of Luoyang Xinqianglian Slewing Bearing Co., Ltd. (SZSE:300850), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of retail investors took a hit after last week’s 8.3% price drop, insiders with their 36% also suffered.

Let's delve deeper into each type of owner of Luoyang Xinqianglian Slewing Bearing, beginning with the chart below.

See our latest analysis for Luoyang Xinqianglian Slewing Bearing

What Does The Institutional Ownership Tell Us About Luoyang Xinqianglian Slewing Bearing?

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.

Luoyang Xinqianglian Slewing Bearing already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Luoyang Xinqianglian Slewing Bearing's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Luoyang Xinqianglian Slewing Bearing. The company's largest shareholder is Zhenqiang Xiao, with ownership of 19%. In comparison, the second and third largest shareholders hold about 18% and 7.4% of the stock. Gaoqiang Xiao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

We did some more digging and found that 6 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Luoyang Xinqianglian Slewing Bearing

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. 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.

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.

It seems insiders own a significant proportion of Luoyang Xinqianglian Slewing Bearing Co., Ltd.. Insiders own CN¥2.2b worth of shares in the CN¥6.1b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Luoyang Xinqianglian Slewing Bearing. 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 Equity Ownership

Private equity firms hold a 7.4% stake in Luoyang Xinqianglian Slewing Bearing. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Luoyang Xinqianglian Slewing Bearing better, we need to consider many other factors. For instance, we've identified 2 warning signs for Luoyang Xinqianglian Slewing Bearing (1 can't be ignored) that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.