Shenzhen Fenda Technology Co., Ltd.'s (SZSE:002681) market cap dropped CN¥498m last week; Individual investors bore the brunt

Key Insights

• Shenzhen Fenda Technology's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 43% of the business is held by the top 25 shareholders
• Insider ownership in Shenzhen Fenda Technology is 24%

Every investor in Shenzhen Fenda Technology Co., Ltd. (SZSE:002681) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 24% came under pressure after market cap dropped to CN¥6.0b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Shenzhen Fenda Technology.

See our latest analysis for Shenzhen Fenda Technology

What Does The Institutional Ownership Tell Us About Shenzhen Fenda 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.

We can see that Shenzhen Fenda Technology does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Shenzhen Fenda Technology's earnings history below. Of course, the future is what really matters.

Shenzhen Fenda Technology is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Fen Xiao with 16% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.1% and 4.8% of the stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 Shenzhen Fenda Technology

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Shenzhen Fenda Technology Co., Ltd.. It has a market capitalization of just CN¥6.0b, and insiders have CN¥1.5b worth of shares in their own names. 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 -- including retail investors -- own 57% of Shenzhen Fenda Technology. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

Private equity firms hold a 5.1% stake in Shenzhen Fenda Technology. This suggests they can be influential in key policy decisions. 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.

Private Company Ownership

It seems that Private Companies own 5.5%, of the Shenzhen Fenda Technology stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Shenzhen Fenda Technology you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

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