Micro-Tech (Nanjing) Co.,Ltd's (SHSE:688029) last week's 6.8% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Micro-Tech (Nanjing)Ltd indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 51% of the company
• Institutions own 24% of Micro-Tech (Nanjing)Ltd

A look at the shareholders of Micro-Tech (Nanjing) Co.,Ltd (SHSE:688029) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 25% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥917m.

In the chart below, we zoom in on the different ownership groups of Micro-Tech (Nanjing)Ltd.

See our latest analysis for Micro-Tech (Nanjing)Ltd

What Does The Institutional Ownership Tell Us About Micro-Tech (Nanjing)Ltd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Micro-Tech (Nanjing)Ltd 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 Micro-Tech (Nanjing)Ltd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Micro-Tech (Nanjing)Ltd. Looking at our data, we can see that the largest shareholder is China Science & Merchants Investment Management Group Co., Ltd. with 22% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 5.9%, of the shares outstanding, respectively. Additionally, the company's CEO Derong Leng directly holds 1.3% of the total shares outstanding.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 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 Micro-Tech (Nanjing)Ltd

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.

We can see that insiders own shares in Micro-Tech (Nanjing) Co.,Ltd. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥371m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in Micro-Tech (Nanjing)Ltd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 22% stake in Micro-Tech (Nanjing)Ltd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 25%, of the Micro-Tech (Nanjing)Ltd stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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 1 warning sign for Micro-Tech (Nanjing)Ltd 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.