Individual investors are Qu Mei Home Furnishings Group Co.,Ltd's (SHSE:603818) biggest owners and were hit after market cap dropped CN¥295m

Key Insights

• Significant control over Qu Mei Home Furnishings GroupLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 25 shareholders
• Insiders own 42% of Qu Mei Home Furnishings GroupLtd

To get a sense of who is truly in control of Qu Mei Home Furnishings Group Co.,Ltd (SHSE:603818), it is important to understand the ownership structure of the business. With 50% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 42% came under pressure after market cap dropped to CN¥2.0b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Qu Mei Home Furnishings GroupLtd.

View our latest analysis for Qu Mei Home Furnishings GroupLtd

What Does The Institutional Ownership Tell Us About Qu Mei Home Furnishings GroupLtd?

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.

Qu Mei Home Furnishings GroupLtd 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 Qu Mei Home Furnishings GroupLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Qu Mei Home Furnishings GroupLtd. The company's CEO Rui Hai Zhao is the largest shareholder with 19% of shares outstanding. With 18% and 5.0% of the shares outstanding respectively, Rui Bin Zhao and Rui Jie Zhao are the second and third largest shareholders. Note that two of the top three shareholders are also Senior Key Executive and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. 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 Qu Mei Home Furnishings GroupLtd

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.

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 Qu Mei Home Furnishings Group Co.,Ltd. Insiders have a CN¥853m stake in this CN¥2.0b business. 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 50% of Qu Mei Home Furnishings GroupLtd shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Qu Mei Home Furnishings GroupLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Qu Mei Home Furnishings GroupLtd (at least 1 which can't be ignored) , 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.