Individual investors invested in Chengdu Hongqi Chain Co.,Ltd. (SZSE:002697) copped the brunt of last week's CN¥449m market cap decline

Key Insights

• Chengdu Hongqi ChainLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 5 shareholders
• Insiders own 21% of Chengdu Hongqi ChainLtd

Every investor in Chengdu Hongqi Chain Co.,Ltd. (SZSE:002697) should be aware of the most powerful shareholder groups. With 38% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 5.5% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 21% stock also took a hit.

Let's delve deeper into each type of owner of Chengdu Hongqi ChainLtd, beginning with the chart below.

See our latest analysis for Chengdu Hongqi ChainLtd

What Does The Institutional Ownership Tell Us About Chengdu Hongqi ChainLtd?

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 Chengdu Hongqi ChainLtd. 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. 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 Chengdu Hongqi ChainLtd, (below). Of course, keep in mind that there are other factors to consider, too.

It would appear that 17% of Chengdu Hongqi ChainLtd shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is the CEO Shiru Cao with 18% of shares outstanding. Sichuan Commercial Investment Co., Ltd. is the second largest shareholder owning 17% of common stock, and Yonghui Superstores Co., Ltd. holds about 11% of the company stock.

On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Chengdu Hongqi ChainLtd

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.

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 Chengdu Hongqi Chain Co.,Ltd.. It is very interesting to see that insiders have a meaningful CN¥1.6b stake in this CN¥7.7b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 38% 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.

Public Company Ownership

It appears to us that public companies own 11% of Chengdu Hongqi ChainLtd. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. For example, we've discovered 1 warning sign for Chengdu Hongqi ChainLtd that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.