Tianshui Huatian Technology Co., Ltd.'s (SZSE:002185) stock price dropped 7.2% last week; individual investors would not be happy

Key Insights

• The considerable ownership by individual investors in Tianshui Huatian Technology indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 40% of the company
• Institutions own 18% of Tianshui Huatian Technology

To get a sense of who is truly in control of Tianshui Huatian Technology Co., Ltd. (SZSE:002185), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 59% ownership. 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, individual investors as a group endured the highest losses last week after market cap fell by CN¥1.9b.

Let's delve deeper into each type of owner of Tianshui Huatian Technology, beginning with the chart below.

View our latest analysis for Tianshui Huatian Technology

What Does The Institutional Ownership Tell Us About Tianshui Huatian Technology?

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.

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

Tianshui Huatian Technology is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Tianshui Huatian Microelectronics Co. Ltd. with 22% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.2% and 2.2% of the stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Tianshui Huatian Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own less than 1% of Tianshui Huatian Technology Co., Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. Keep in mind that it's a big company, and the insiders own CN¥8.4m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 59% of Tianshui Huatian Technology. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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:

It's always worth thinking about the different groups who own shares in a company. But to understand Tianshui Huatian Technology better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Tianshui Huatian Technology 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.