Following recent decline, Qingdao Topscomm Communication INC.'s (SHSE:603421) top shareholder CEO Fanyi Zeng sees holdings value drop by 21%

Key Insights

• Insiders appear to have a vested interest in Qingdao Topscomm Communication's growth, as seen by their sizeable ownership
• 50% of the business is held by the top 2 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Qingdao Topscomm Communication INC. (SHSE:603421) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 73% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥4.1b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Qingdao Topscomm Communication.

See our latest analysis for Qingdao Topscomm Communication

What Does The Lack Of Institutional Ownership Tell Us About Qingdao Topscomm Communication?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Qingdao Topscomm Communication, for yourself, below.

We note that hedge funds don't have a meaningful investment in Qingdao Topscomm Communication. The company's CEO Fanyi Zeng is the largest shareholder with 27% of shares outstanding. Jianhua Wang is the second largest shareholder owning 23% of common stock, and Tian Yu Wang holds about 6.1% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Qingdao Topscomm Communication

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 information suggests that insiders own more than half of Qingdao Topscomm Communication INC.. This gives them effective control of the company. So they have a CN¥3.0b stake in this CN¥4.1b 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-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Qingdao Topscomm Communication better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Qingdao Topscomm Communication (of which 1 can't be ignored!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.