The recent drop in prices must have disappointed Brite Semiconductor (Shanghai) Co., Ltd. (SHSE:688691) institutional investors who own 25% of the shares

Key Insights

• Given the large stake in the stock by institutions, Brite Semiconductor (Shanghai)'s stock price might be vulnerable to their trading decisions
• 52% of the business is held by the top 7 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Brite Semiconductor (Shanghai) Co., Ltd. (SHSE:688691), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 25% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 7.1% decline in share price, institutional suffered the most losses.

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

View our latest analysis for Brite Semiconductor (Shanghai)

What Does The Institutional Ownership Tell Us About Brite Semiconductor (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.

As you can see, institutional investors have a fair amount of stake in Brite Semiconductor (Shanghai). 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. 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 Brite Semiconductor (Shanghai), (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Brite Semiconductor (Shanghai). Semiconductor Manufacturing International Corporation is currently the company's largest shareholder with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 10% of the stock. Furthermore, CEO Zhiqing Zhuang is the owner of 2.6% 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 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Brite Semiconductor (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 some shares in Brite Semiconductor (Shanghai) Co., Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥214m worth of shares (at current prices). 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 Brite Semiconductor (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

Private equity firms hold a 22% stake in Brite Semiconductor (Shanghai). This suggests they can be influential in key policy decisions. 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

It seems that Private Companies own 12%, of the Brite Semiconductor (Shanghai) stock. 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.

Public Company Ownership

It appears to us that public companies own 14% of Brite Semiconductor (Shanghai). This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Brite Semiconductor (Shanghai) (of which 1 is significant!) you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.