VeriSilicon Microelectronics (Shanghai) Co., Ltd.'s (SHSE:688521) latest 3.6% decline adds to one-year losses, institutional investors may consider drastic measures

Key Insights

• Institutions' substantial holdings in VeriSilicon Microelectronics (Shanghai) implies that they have significant influence over the company's share price
• A total of 7 investors have a majority stake in the company with 52% ownership
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls VeriSilicon Microelectronics (Shanghai) Co., Ltd. (SHSE:688521), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 34% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to CN¥13b last week after a 3.6% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 60% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell VeriSilicon Microelectronics (Shanghai), which might have negative implications on individual investors.

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

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.

We can see that VeriSilicon Microelectronics (Shanghai) 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 VeriSilicon Microelectronics (Shanghai)'s historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in VeriSilicon Microelectronics (Shanghai). Looking at our data, we can see that the largest shareholder is VeriSilicon Limited with 15% of shares outstanding. Shanghai Xingcheng Investment Management Co., Ltd. is the second largest shareholder owning 9.0% of common stock, and Wealth Strategy Holding Ltd holds about 7.8% of the company stock. In addition, we found that Wei-Ming Dai, the CEO has 1.7% of the shares allocated to their name.

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.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of VeriSilicon Microelectronics (Shanghai)

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 some shares in VeriSilicon Microelectronics (Shanghai) Co., Ltd.. The insiders have a meaningful stake worth CN¥327m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over VeriSilicon Microelectronics (Shanghai). 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.

Private Equity Ownership

Private equity firms hold a 16% stake in VeriSilicon Microelectronics (Shanghai). This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

Our data indicates that Private Companies hold 23%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Case in point: We've spotted 1 warning sign for VeriSilicon Microelectronics (Shanghai) you should be aware of.

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.