While individual investors own 43% of Shanxi Securities Co., Ltd. (SZSE:002500), private companies are its largest shareholders with 49% ownership

Key Insights

• Shanxi Securities' significant private companies 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
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Shanxi Securities Co., Ltd. (SZSE:002500) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual investors, on the other hand, account for 43% of the company's stockholders.

In the chart below, we zoom in on the different ownership groups of Shanxi Securities.

View our latest analysis for Shanxi Securities

What Does The Institutional Ownership Tell Us About Shanxi Securities?

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.

Shanxi Securities already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Shanxi Securities, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Shanxi Securities. Looking at our data, we can see that the largest shareholder is Shanxi Financial Investment Holdings Limited with 32% of shares outstanding. With 10% and 6.0% of the shares outstanding respectively, China Baowu Steel Group Co.,Ltd and Shanxi State-owned Capital Operation Co., Ltd. are the second and third largest shareholders.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Shanxi Securities

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. 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.

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. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Shanxi Securities. 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.

Private Company Ownership

It seems that Private Companies own 49%, of the Shanxi Securities stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Shanxi Securities that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.