Suzhou Nanomicro Technology Co., Ltd.'s (SHSE:688690) last week's 4.9% decline must have disappointed private companies who have a significant stake

Key Insights

• Suzhou Nanomicro Technology's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 5 shareholders own 50% of the company
• Insider ownership in Suzhou Nanomicro Technology is 26%

A look at the shareholders of Suzhou Nanomicro Technology Co., Ltd. (SHSE:688690) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 26% shares weren’t spared from last week’s CN¥376m market cap drop, private companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Suzhou Nanomicro Technology.

Check out our latest analysis for Suzhou Nanomicro Technology

What Does The Institutional Ownership Tell Us About Suzhou Nanomicro Technology?

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.

Suzhou Nanomicro Technology already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Suzhou Nanomicro Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

Suzhou Nanomicro Technology is not owned by hedge funds. Shenzhen Nanomicro Technology Co., Ltd. is currently the largest shareholder, with 19% of shares outstanding. With 16% and 7.1% of the shares outstanding respectively, Biwang Jiang and Suzhou Nayan Investment Consulting Partnership Enterprise (Limited Partnership) are the second and third largest shareholders.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Suzhou Nanomicro Technology

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 Suzhou Nanomicro Technology Co., Ltd.. Insiders own CN¥1.9b worth of shares in the CN¥7.3b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. 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

We can see that Private Companies own 32%, of the shares on issue. 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. For instance, we've identified 1 warning sign for Suzhou Nanomicro Technology that you should be aware of.

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