SG Micro Corp's (SZSE:300661) 11% gain last week benefited both individual investors who own 33% as well as insiders

Key Insights

• SG Micro's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 9 shareholders
• Insider ownership in SG Micro is 33%

A look at the shareholders of SG Micro Corp (SZSE:300661) can tell us which group is most powerful. With 33% stake, individual investors 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).

While individual investors were the group that benefitted the most from last week’s CN¥3.7b market cap gain, insiders too had a 33% share in those profits.

Let's delve deeper into each type of owner of SG Micro, beginning with the chart below.

See our latest analysis for SG Micro

What Does The Institutional Ownership Tell Us About SG Micro?

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.

SG Micro already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 SG Micro's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in SG Micro. The company's CEO Shilong Zhang is the largest shareholder with 19% of shares outstanding. Qin Zhang is the second largest shareholder owning 8.3% of common stock, and Lin Lin holds about 5.2% of the company stock. Interestingly, the second and third-largest shareholders also happen to be the Secretary and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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

Insider Ownership Of SG Micro

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 SG Micro Corp. It is very interesting to see that insiders have a meaningful CN¥13b stake in this CN¥39b 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

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 4.7%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand SG Micro better, we need to consider many other factors. For instance, we've identified 1 warning sign for SG Micro that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.