Hangzhou Lion Electronics Co.,Ltd's (SHSE:605358) stock price dropped 13% last week; retail investors would not be happy

Key Insights

• The considerable ownership by retail investors in Hangzhou Lion ElectronicsLtd indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 43% ownership
• 18% of Hangzhou Lion ElectronicsLtd is held by insiders

If you want to know who really controls Hangzhou Lion Electronics Co.,Ltd (SHSE:605358), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of retail investors took a hit after last week’s 13% price drop, insiders with their 18% also suffered.

Let's delve deeper into each type of owner of Hangzhou Lion ElectronicsLtd, beginning with the chart below.

See our latest analysis for Hangzhou Lion ElectronicsLtd

What Does The Institutional Ownership Tell Us About Hangzhou Lion ElectronicsLtd?

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.

We can see that Hangzhou Lion ElectronicsLtd does have institutional investors; and they hold a good portion of the company's stock. 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 Hangzhou Lion ElectronicsLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hangzhou Lion ElectronicsLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Minwen Wang with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.0% and 4.7%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Hangzhou Lion ElectronicsLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Hangzhou Lion Electronics Co.,Ltd. Insiders own CN¥2.7b worth of shares in the CN¥15b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 57% stake in Hangzhou Lion ElectronicsLtd, suggesting it is a fairly popular stock. 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

We can see that Private Companies own 12%, of the shares on issue. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hangzhou Lion ElectronicsLtd better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Hangzhou Lion ElectronicsLtd .

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.