Guangzhou Frontop Digital Creative Technology Corporation's (SZSE:301313) market cap dropped CN¥232m last week; Retail investors bore the brunt

Key Insights

• Significant control over Guangzhou Frontop Digital Creative Technology by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 23 shareholders own 50% of the company
• Insiders own 36% of Guangzhou Frontop Digital Creative Technology

If you want to know who really controls Guangzhou Frontop Digital Creative Technology Corporation (SZSE:301313), then you'll have to look at the makeup of its share registry. With 47% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 36% shares weren’t spared from last week’s CN¥232m 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 Guangzhou Frontop Digital Creative Technology.

Check out our latest analysis for Guangzhou Frontop Digital Creative Technology

What Does The Institutional Ownership Tell Us About Guangzhou Frontop Digital Creative Technology?

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.

As you can see, institutional investors have a fair amount of stake in Guangzhou Frontop Digital Creative Technology. 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 Guangzhou Frontop Digital Creative Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Guangzhou Frontop Digital Creative Technology is not owned by hedge funds. With a 30% stake, CEO Suiying Wu is the largest shareholder. Wanxiang Venture Capital Co., Ltd. is the second largest shareholder owning 3.6% of common stock, and Guangdong China Science and Merchants Capital Management Co., Ltd. holds about 1.7% of the company stock.

After doing some more digging, we found that the top 23 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Guangzhou Frontop Digital Creative Technology

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.

Our most recent data indicates that insiders own a reasonable proportion of Guangzhou Frontop Digital Creative Technology Corporation. Insiders own CN¥724m worth of shares in the CN¥2.0b 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

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Guangzhou Frontop Digital Creative Technology. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

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 example, we've discovered 3 warning signs for Guangzhou Frontop Digital Creative Technology (2 don't sit too well with us!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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