Shanghai Haixin Group Co., Ltd.'s (SHSE:600851) last week's 5.9% decline must have disappointed individual investors who have a significant stake

Key Insights

• Shanghai Haixin Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 47% of the business is held by the top 25 shareholders
• Institutions own 20% of Shanghai Haixin Group

Every investor in Shanghai Haixin Group Co., Ltd. (SHSE:600851) should be aware of the most powerful shareholder groups. With 53% 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 following last week's 5.9% decline in share price, individual investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Shanghai Haixin Group.

See our latest analysis for Shanghai Haixin Group

What Does The Institutional Ownership Tell Us About Shanghai Haixin Group?

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.

Shanghai Haixin Group 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 Shanghai Haixin Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Shanghai Haixin Group. Our data shows that Shenzhen Ning Rui Investment Management Enterprise (Limited Partnership) is the largest shareholder with 12% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.8% and 5.0% of the stock.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Shanghai Haixin Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 can report that insiders do own shares in Shanghai Haixin Group Co., Ltd.. It has a market capitalization of just CN¥4.5b, and insiders have CN¥108m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 53% of Shanghai Haixin Group shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 24%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Haixin Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Shanghai Haixin Group that you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free 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.