Sichuan Haowu Electromechanical Co., Ltd.'s (SZSE:000757) market cap dropped CN¥176m last week; Individual investors bore the brunt

Key Insights

• Significant control over Sichuan Haowu Electromechanical by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 17 shareholders own 44% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

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. The group holding the most number of shares in the company, around 56% to be precise, is individual investors. 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 11% decline in share price, individual investors suffered the most losses.

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

See 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 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. 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 Sichuan Haowu Electromechanical, (below). Of course, keep in mind that there are other factors to consider, too.

Sichuan Haowu Electromechanical is not owned by hedge funds. Our data shows that Tianjin Haoling Automobile Trading Co., Ltd. is the largest shareholder with 28% of shares outstanding. Shenwan Hongyuan Group Co., Ltd. is the second largest shareholder owning 6.2% of common stock, and Tianjin Rongcheng Property Group Co., Ltd. holds about 2.9% of the company stock.

A deeper look at our ownership data shows that the top 17 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Sichuan Haowu Electromechanical Co., Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It has a market capitalization of just CN¥1.4b, and the board has only CN¥5.6k 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, mostly comprising of individual investors, collectively holds 56% of Sichuan Haowu Electromechanical 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

We can see that Private Companies own 32%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 6.2% of Sichuan Haowu Electromechanical. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Sichuan Haowu Electromechanical .

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.