Jiangsu Liba Enterprise Joint-Stock Co., Ltd.'s (SHSE:603519) stock price dropped 11% last week; retail investors would not be happy

Key Insights

• Jiangsu Liba Enterprise's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 53% of the company
• Insiders own 32% of Jiangsu Liba Enterprise

Every investor in Jiangsu Liba Enterprise Joint-Stock Co., Ltd. (SHSE:603519) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 32% came under pressure after market cap dropped to CN¥3.0b last week,retail investors took the most losses.

Let's delve deeper into each type of owner of Jiangsu Liba Enterprise, beginning with the chart below.

View our latest analysis for Jiangsu Liba Enterprise

What Does The Institutional Ownership Tell Us About Jiangsu Liba Enterprise?

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.

Jiangsu Liba Enterprise 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 Jiangsu Liba Enterprise, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Jiangsu Liba Enterprise. Looking at our data, we can see that the largest shareholder is Feng Xian Lu with 26% of shares outstanding. With 22% and 4.6% of the shares outstanding respectively, Yancheng Oriental Investment & Development Group Co., Ltd. and Huatai Zijin Investment Co. Ltd are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Jiangsu Liba Enterprise

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own a reasonable proportion of Jiangsu Liba Enterprise Joint-Stock Co., Ltd.. Insiders own CN¥945m worth of shares in the CN¥3.0b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Jiangsu Liba Enterprise. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 22%, of the Jiangsu Liba Enterprise 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Jiangsu Liba Enterprise (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com