Retail investors are Shanghai Taihe Water Technology Development Co.,Ltd.'s (SHSE:605081) biggest owners and were hit after market cap dropped CN¥164m

Key Insights

• The considerable ownership by retail investors in Shanghai Taihe Water Technology DevelopmentLtd indicates that they collectively have a greater say in management and business strategy
• A total of 15 investors have a majority stake in the company with 43% ownership
• Insiders own 23% of Shanghai Taihe Water Technology DevelopmentLtd

To get a sense of who is truly in control of Shanghai Taihe Water Technology Development Co.,Ltd. (SHSE:605081), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 11% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 23% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Shanghai Taihe Water Technology DevelopmentLtd.

Check out our latest analysis for Shanghai Taihe Water Technology DevelopmentLtd

What Does The Institutional Ownership Tell Us About Shanghai Taihe Water Technology DevelopmentLtd?

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.

Shanghai Taihe Water Technology DevelopmentLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Shanghai Taihe Water Technology DevelopmentLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Shanghai Taihe Water Technology DevelopmentLtd. With a 23% stake, CEO Wenhui He is the largest shareholder. For context, the second largest shareholder holds about 6.4% of the shares outstanding, followed by an ownership of 3.4% by the third-largest shareholder.

On studying our ownership data, we found that 15 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shanghai Taihe Water Technology DevelopmentLtd

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 Shanghai Taihe Water Technology Development Co.,Ltd.. Insiders own CN¥309m worth of shares in the CN¥1.4b 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, mostly comprising of individual investors, collectively holds 57% of Shanghai Taihe Water Technology DevelopmentLtd shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

With an ownership of 6.4%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Taihe Water Technology DevelopmentLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Shanghai Taihe Water Technology DevelopmentLtd you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.