Institutional investors have a lot riding on VeriSilicon Microelectronics (Shanghai) Co., Ltd. (SHSE:688521) with 29% ownership

Key Insights

• Given the large stake in the stock by institutions, VeriSilicon Microelectronics (Shanghai)'s stock price might be vulnerable to their trading decisions
• A total of 7 investors have a majority stake in the company with 52% ownership
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of VeriSilicon Microelectronics (Shanghai) Co., Ltd. (SHSE:688521) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 29% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And things are looking up for institutional investors after the company gained CN¥3.8b in market cap last week. The one-year return on investment is currently 15% and last week's gain would have been more than welcomed.

Let's take a closer look to see what the different types of shareholders can tell us about VeriSilicon Microelectronics (Shanghai).

View our latest analysis for VeriSilicon Microelectronics (Shanghai)

What Does The Institutional Ownership Tell Us About VeriSilicon Microelectronics (Shanghai)?

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.

VeriSilicon Microelectronics (Shanghai) already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 VeriSilicon Microelectronics (Shanghai)'s historic earnings and revenue below, but keep in mind there's always more to the story.

VeriSilicon Microelectronics (Shanghai) is not owned by hedge funds. VeriSilicon Limited is currently the largest shareholder, with 15% of shares outstanding. With 9.0% and 7.8% of the shares outstanding respectively, Shanghai Xingcheng Investment Management Co., Ltd. and Wealth Strategy Holding Ltd are the second and third largest shareholders. Furthermore, CEO Wei-Ming Dai is the owner of 1.7% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of VeriSilicon Microelectronics (Shanghai)

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.

Shareholders would probably be interested to learn that insiders own shares in VeriSilicon Microelectronics (Shanghai) Co., Ltd.. The insiders have a meaningful stake worth CN¥680m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in VeriSilicon Microelectronics (Shanghai). While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 16%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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

We can see that Private Companies own 23%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with VeriSilicon Microelectronics (Shanghai) , and understanding them should be part of your investment process.

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.