Chengdu Wintrue Holding Co., Ltd.'s (SZSE:002539) stock price dropped 3.7% last week; retail investors would not be happy

Key Insights

• Chengdu Wintrue Holding's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 25 shareholders own 47% of the company
• Insiders own 38% of Chengdu Wintrue Holding

If you want to know who really controls Chengdu Wintrue Holding Co., Ltd. (SZSE:002539), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 53% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 38% shares weren’t spared from last week’s CN¥373m market cap drop, retail investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Chengdu Wintrue Holding.

See our latest analysis for Chengdu Wintrue Holding

What Does The Institutional Ownership Tell Us About Chengdu Wintrue Holding?

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.

Chengdu Wintrue Holding 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. 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 Chengdu Wintrue Holding's 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 Chengdu Wintrue Holding. Looking at our data, we can see that the largest shareholder is the CEO Rui Song with 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.8% and 2.1%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Chengdu Wintrue Holding

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our information suggests that insiders maintain a significant holding in Chengdu Wintrue Holding Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥3.7b stake in this CN¥9.8b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 53% stake in Chengdu Wintrue Holding, suggesting it is a fairly popular stock. 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.

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 Chengdu Wintrue Holding is showing 4 warning signs in our investment analysis , and 2 of those are significant...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.