Individual investors who have a significant stake must be disappointed along with institutions after Sichuan Lutianhua Company Limited By Shares' (SZSE:000912) market cap dropped by CN¥439m

Key Insights

• Significant control over Sichuan Lutianhua Company Limited By Shares by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 56% of the company
• Institutional ownership in Sichuan Lutianhua Company Limited By Shares is 29%

To get a sense of who is truly in control of Sichuan Lutianhua Company Limited By Shares (SZSE:000912), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 56% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 29% shares weren’t spared from last week’s CN¥439m market cap drop, individual investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Sichuan Lutianhua Company Limited By Shares.

Check out our latest analysis for Sichuan Lutianhua Company Limited By Shares

What Does The Institutional Ownership Tell Us About Sichuan Lutianhua Company Limited By Shares?

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.

We can see that Sichuan Lutianhua Company Limited By Shares does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Sichuan Lutianhua Company Limited By Shares, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Sichuan Lutianhua Company Limited By Shares. The company's largest shareholder is Luzhou Industry Development Investment Group Co., Ltd, with ownership of 31%. Bank of China Investment Management Co., Ltd. is the second largest shareholder owning 16% of common stock, and Agricultural Bank of China Ltd., Asset Management Arm holds about 8.9% of the company stock.

To make our study more interesting, we found that the top 3 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. 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 Sichuan Lutianhua Company Limited By Shares

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We note our data does not show any board members 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 -- including retail investors -- own 56% of Sichuan Lutianhua Company Limited By Shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 15%, of the shares on issue. 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. Be aware that Sichuan Lutianhua Company Limited By Shares is showing 2 warning signs in our investment analysis , you should know about...

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.