Institutions profited after Smarter Microelectronics (Guangzhou) Co., Ltd.'s (SHSE:688512) market cap rose CN¥581m last week but retail investors profited the most

Key Insights

• Smarter Microelectronics (Guangzhou)'s significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 25 shareholders own 48% of the company
• Insider ownership in Smarter Microelectronics (Guangzhou) is 12%

If you want to know who really controls Smarter Microelectronics (Guangzhou) Co., Ltd. (SHSE:688512), 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 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Retail investors gained the most after market cap touched CN¥4.9b last week, while institutions who own 18% also benefitted.

Let's delve deeper into each type of owner of Smarter Microelectronics (Guangzhou), beginning with the chart below.

View our latest analysis for Smarter Microelectronics (Guangzhou)

What Does The Institutional Ownership Tell Us About Smarter Microelectronics (Guangzhou)?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

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

Smarter Microelectronics (Guangzhou) is not owned by hedge funds. With a 7.5% stake, CEO Li Yang is the largest shareholder. Huaxin Investment Management Co., Ltd. is the second largest shareholder owning 5.6% of common stock, and Yaohui Guo holds about 4.3% of the company stock. Interestingly, the third-largest shareholder, Yaohui Guo is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Smarter Microelectronics (Guangzhou)

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. 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.

It seems insiders own a significant proportion of Smarter Microelectronics (Guangzhou) Co., Ltd.. It has a market capitalization of just CN¥4.9b, and insiders have CN¥579m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 52% of Smarter Microelectronics (Guangzhou). 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 Equity Ownership

With a stake of 5.6%, private equity firms could influence the Smarter Microelectronics (Guangzhou) board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 12%, 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Smarter Microelectronics (Guangzhou) (at least 1 which is concerning) , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.