Individual investors invested in Jilin Liyuan Precision Manufacturing Co., Ltd. (SZSE:002501) copped the brunt of last week's CN¥1.3b market cap decline

Key Insights

• The considerable ownership by individual investors in Jilin Liyuan Precision Manufacturing indicates that they collectively have a greater say in management and business strategy
• The top 11 shareholders own 44% of the company
• Institutional ownership in Jilin Liyuan Precision Manufacturing is 19%

Every investor in Jilin Liyuan Precision Manufacturing Co., Ltd. (SZSE:002501) should be aware of the most powerful shareholder groups. With 56% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, individual investors endured the biggest losses as the stock fell by 17%.

Let's take a closer look to see what the different types of shareholders can tell us about Jilin Liyuan Precision Manufacturing.

Check out our latest analysis for Jilin Liyuan Precision Manufacturing

What Does The Institutional Ownership Tell Us About Jilin Liyuan Precision Manufacturing?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Jilin Liyuan Precision Manufacturing 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. 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 Jilin Liyuan Precision Manufacturing's historic earnings and revenue below, but keep in mind there's always more to the story.

Jilin Liyuan Precision Manufacturing is not owned by hedge funds. The company's largest shareholder is Beiyou Intelligent Technology (Shenzhen) Co., Ltd., with ownership of 23%. For context, the second largest shareholder holds about 5.0% of the shares outstanding, followed by an ownership of 3.6% by the third-largest shareholder.

On studying our ownership data, we found that 11 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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

Insider Ownership Of Jilin Liyuan Precision Manufacturing

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 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, mostly comprising of individual investors, collectively holds 56% of Jilin Liyuan Precision Manufacturing shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 25%, 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:

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 2 warning signs with Jilin Liyuan Precision Manufacturing (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.