Private companies invested in Sichuan Jiuzhou Electronic Co., Ltd. (SZSE:000801) copped the brunt of last week's CN¥419m market cap decline

Key Insights

• The considerable ownership by private companies in Sichuan Jiuzhou Electronic indicates that they collectively have a greater say in management and business strategy
• 50% of the business is held by the top 3 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Sichuan Jiuzhou Electronic Co., Ltd. (SZSE:000801) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 50% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥11b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Sichuan Jiuzhou Electronic.

View our latest analysis for Sichuan Jiuzhou Electronic

What Does The Institutional Ownership Tell Us About Sichuan Jiuzhou Electronic?

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.

As you can see, institutional investors have a fair amount of stake in Sichuan Jiuzhou Electronic. 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. 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 Sichuan Jiuzhou Electronic's earnings history below. Of course, the future is what really matters.

Sichuan Jiuzhou Electronic is not owned by hedge funds. Our data shows that Sichuan Jiuzhou Investment Holding Group Co., Ltd. is the largest shareholder with 48% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 1.3% and 1.2%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Sichuan Jiuzhou Electronic

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data cannot confirm that board members are holding shares personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public-- including retail investors -- own 43% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 50%, of the company's shares. 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 Sichuan Jiuzhou Electronic better, we need to consider many other factors. Take risks for example - Sichuan Jiuzhou Electronic has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.