Retail investors invested in Sichuan Haowu Electromechanical Co., Ltd. (SZSE:000757) copped the brunt of last week's CN¥205m market cap decline

Key Insights

• Sichuan Haowu Electromechanical's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 21 investors have a majority stake in the company with 46% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Sichuan Haowu Electromechanical Co., Ltd. (SZSE:000757), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 10% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Sichuan Haowu Electromechanical.

Check out our latest analysis for Sichuan Haowu Electromechanical

What Does The Institutional Ownership Tell Us About Sichuan Haowu Electromechanical?

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.

Sichuan Haowu Electromechanical already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Sichuan Haowu Electromechanical's historic earnings and revenue below, but keep in mind there's always more to the story.

Sichuan Haowu Electromechanical is not owned by hedge funds. The company's largest shareholder is Tianjin Haoling Automobile Trading Co., Ltd., with ownership of 28%. With 5.3% and 3.0% of the shares outstanding respectively, Shenwan Hongyuan Group Co., Ltd. and Tianjin Rongcheng Property Group Co., Ltd. are the second and third largest shareholders.

Our studies suggest that the top 21 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.

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. 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 Sichuan Haowu Electromechanical

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our data suggests that insiders own under 1% of Sichuan Haowu Electromechanical Co., Ltd. in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just CN¥1.8b, and the board has only CN¥7.1k worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public -- including retail investors -- own 54% of Sichuan Haowu Electromechanical. 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

Our data indicates that Private Companies hold 32%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

It appears to us that public companies own 5.3% of Sichuan Haowu Electromechanical. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Sichuan Haowu Electromechanical has 1 warning sign we think you should be aware of.

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.