Shenzhen Longtu Photomask Co., Ltd. (SHSE:688721) adds CN¥368m in market cap and insiders have a 54% stake in that gain

Key Insights

• Shenzhen Longtu Photomask's significant insider ownership suggests inherent interests in company's expansion
• A total of 3 investors have a majority stake in the company with 54% ownership
• 11% of Shenzhen Longtu Photomask is held by Institutions

Every investor in Shenzhen Longtu Photomask Co., Ltd. (SHSE:688721) should be aware of the most powerful shareholder groups. With 54% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week’s 5.4% gain.

In the chart below, we zoom in on the different ownership groups of Shenzhen Longtu Photomask.

Check out our latest analysis for Shenzhen Longtu Photomask

What Does The Institutional Ownership Tell Us About Shenzhen Longtu Photomask?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Shenzhen Longtu Photomask. 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 Shenzhen Longtu Photomask's historic earnings and revenue below, but keep in mind there's always more to the story.

Shenzhen Longtu Photomask is not owned by hedge funds. Hanqi Ke is currently the largest shareholder, with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 15%, of the shares outstanding, respectively. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Shenzhen Longtu Photomask

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 the majority of Shenzhen Longtu Photomask Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥7.2b, that means they have CN¥3.9b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Longtu Photomask. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 6.2%, of the Shenzhen Longtu Photomask 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Shenzhen Longtu Photomask is showing 2 warning signs in our investment analysis , and 1 of those is significant...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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

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.