Bestechnic (Shanghai) Co., Ltd.'s (SHSE:688608) 11% gain last week benefited both retail investors who own 30% as well as insiders

Key Insights

• The considerable ownership by retail investors in Bestechnic (Shanghai) indicates that they collectively have a greater say in management and business strategy
• The top 12 shareholders own 51% of the company
• Insiders own 26% of Bestechnic (Shanghai)

If you want to know who really controls Bestechnic (Shanghai) Co., Ltd. (SHSE:688608), then you'll have to look at the makeup of its share registry. With 30% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Retail investors gained the most after market cap touched CN¥21b last week, while insiders who own 26% also benefitted.

In the chart below, we zoom in on the different ownership groups of Bestechnic (Shanghai).

See our latest analysis for Bestechnic (Shanghai)

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

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Bestechnic (Shanghai) 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Bestechnic (Shanghai), (below). Of course, keep in mind that there are other factors to consider, too.

Bestechnic (Shanghai) is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Bestechnic (Shanghai)'s case, its Head of Corporate Communications, Xiaodong Tang, is the largest shareholder, holding 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 8.7% of the stock. Interestingly, the second-largest shareholder, Guoguang Zhao is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Bestechnic (Shanghai)

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our most recent data indicates that insiders own a reasonable proportion of Bestechnic (Shanghai) Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥5.3b stake in this CN¥21b business. 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

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Bestechnic (Shanghai). While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With an ownership of 8.7%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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:

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.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com