Private companies invested in Shanghai Action Education Technology CO.,LTD. (SHSE:605098) copped the brunt of last week's CN¥394m market cap decline

Key Insights

• The considerable ownership by private companies in Shanghai Action Education TechnologyLTD indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 50% ownership
• Insiders own 33% of Shanghai Action Education TechnologyLTD

A look at the shareholders of Shanghai Action Education Technology CO.,LTD. (SHSE:605098) can tell us which group is most powerful. The group holding the most number of shares in the company, around 34% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 33% shares weren’t spared from last week’s CN¥394m market cap drop, private companies as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Action Education TechnologyLTD.

See our latest analysis for Shanghai Action Education TechnologyLTD

What Does The Institutional Ownership Tell Us About Shanghai Action Education TechnologyLTD?

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 Shanghai Action Education TechnologyLTD does have institutional investors; and they hold a good portion of the company's stock. 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 Shanghai Action Education TechnologyLTD, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Shanghai Action Education TechnologyLTD. The company's CEO Jian Li is the largest shareholder with 31% of shares outstanding. Shanghai Lanxiao Business Consulting Enterprise Management (Limited Partnership) is the second largest shareholder owning 19% of common stock, and Shanghai Yundun Business Consulting Partnership Enterprise (Limited Partnership) holds about 10% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Shanghai Action Education TechnologyLTD

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Shanghai Action Education Technology CO.,LTD.. Insiders own CN¥1.5b worth of shares in the CN¥4.5b company. 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 12% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 34%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Action Education TechnologyLTD better, we need to consider many other factors. Take risks for example - Shanghai Action Education TechnologyLTD has 1 warning sign we think you should be aware of.

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.