Wuxi DK Electronic Materials Co.,Ltd.'s (SZSE:300842) market cap dropped CN¥809m last week; individual investors who hold 43% were hit as were institutions

Key Insights

• Wuxi DK Electronic MaterialsLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 15 shareholders own 51% of the company
• Insiders own 20% of Wuxi DK Electronic MaterialsLtd

To get a sense of who is truly in control of Wuxi DK Electronic Materials Co.,Ltd. (SZSE:300842), 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 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 26% came under pressure after market cap dropped to CN¥5.5b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Wuxi DK Electronic MaterialsLtd.

View our latest analysis for Wuxi DK Electronic MaterialsLtd

What Does The Institutional Ownership Tell Us About Wuxi DK Electronic MaterialsLtd?

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 Wuxi DK Electronic MaterialsLtd. 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. 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 Wuxi DK Electronic MaterialsLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Wuxi DK Electronic MaterialsLtd. With a 16% stake, CEO Weili Shi is the largest shareholder. For context, the second largest shareholder holds about 5.1% of the shares outstanding, followed by an ownership of 4.9% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 15 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Wuxi DK Electronic MaterialsLtd

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.

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.

It seems insiders own a significant proportion of Wuxi DK Electronic Materials Co.,Ltd.. Insiders have a CN¥1.1b stake in this CN¥5.5b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 43% 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

It seems that Private Companies own 9.0%, of the Wuxi DK Electronic MaterialsLtd 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Wuxi DK Electronic MaterialsLtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Wuxi DK Electronic MaterialsLtd (of which 2 make us uncomfortable!) you should know about.

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.

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