Private companies invested in SEP Analytical (Shanghai) Co., Ltd. (SZSE:301228) copped the brunt of last week's CN¥267m market cap decline

Key Insights

• The considerable ownership by private companies in SEP Analytical (Shanghai) indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 2 shareholders
• 12% of SEP Analytical (Shanghai) is held by Institutions

A look at the shareholders of SEP Analytical (Shanghai) Co., Ltd. (SZSE:301228) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥1.3b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about SEP Analytical (Shanghai).

Check out our latest analysis for SEP Analytical (Shanghai)

What Does The Institutional Ownership Tell Us About SEP Analytical (Shanghai)?

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 SEP Analytical (Shanghai). 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. 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 SEP Analytical (Shanghai)'s historic earnings and revenue below, but keep in mind there's always more to the story.

SEP Analytical (Shanghai) is not owned by hedge funds. Our data shows that Shipu (Shanghai) Enterprise Management Co., Ltd. is the largest shareholder with 44% of shares outstanding. Shanghai Weili Enterprise Management Co., Ltd. is the second largest shareholder owning 7.3% of common stock, and Jiangsu Wotu Equity Investment Management Partnership Enterprise (L.P.) holds about 6.6% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 SEP Analytical (Shanghai)

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that SEP Analytical (Shanghai) Co., Ltd. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than CN¥1.4m worth of shares in the CN¥1.3b company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in SEP Analytical (Shanghai). While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 6.6%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 59%, of the SEP Analytical (Shanghai) stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand SEP Analytical (Shanghai) better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for SEP Analytical (Shanghai) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

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.

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