Following recent decline, Edifier Technology Co., Ltd.'s (SZSE:002351) top shareholder CEO Wen Dong Zhang sees holdings value drop by 4.6%

Key Insights

• Edifier Technology's significant insider ownership suggests inherent interests in company's expansion
• A total of 3 investors have a majority stake in the company with 52% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Edifier Technology Co., Ltd. (SZSE:002351), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, insiders endured the biggest losses as the stock fell by 4.6%.

Let's take a closer look to see what the different types of shareholders can tell us about Edifier Technology.

Check out our latest analysis for Edifier Technology

What Does The Institutional Ownership Tell Us About Edifier Technology?

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.

Edifier Technology 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Edifier Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Edifier Technology is not owned by hedge funds. With a 27% stake, CEO Wen Dong Zhang is the largest shareholder. Min Xiao is the second largest shareholder owning 21% of common stock, and Xiao Hong Wang holds about 3.8% of the company stock. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Edifier Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the Edifier Technology Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥8.8b, that means insiders have a whopping CN¥5.0b worth of shares in their own names. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public-- including retail investors -- own 36% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Edifier Technology 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.

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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.