Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (SZSE:300760) insiders, who hold 56% of the firm would be disappointed by the recent pullback

Key Insights

• Shenzhen Mindray Bio-Medical Electronics' significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 52% of the company
• Institutions own 20% of Shenzhen Mindray Bio-Medical Electronics

To get a sense of who is truly in control of Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (SZSE:300760), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥295b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Shenzhen Mindray Bio-Medical Electronics.

See our latest analysis for Shenzhen Mindray Bio-Medical Electronics

What Does The Institutional Ownership Tell Us About Shenzhen Mindray Bio-Medical Electronics?

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 Shenzhen Mindray Bio-Medical Electronics. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Shenzhen Mindray Bio-Medical Electronics' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Shenzhen Mindray Bio-Medical Electronics. The company's largest shareholder is Xiting Li, with ownership of 27%. For context, the second largest shareholder holds about 25% of the shares outstanding, followed by an ownership of 4.3% by the third-largest shareholder. Cheng Minghe, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Shenzhen Mindray Bio-Medical Electronics

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 own more than half of Shenzhen Mindray Bio-Medical Electronics Co., Ltd.. This gives them effective control of the company. That means insiders have a very meaningful CN¥165b stake in this CN¥295b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Shenzhen Mindray Bio-Medical Electronics. 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

Our data indicates that Private Companies hold 3.2%, of the company's shares. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shenzhen Mindray Bio-Medical Electronics , and understanding them should be part of your investment process.

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.