Daheng New Epoch Technology Inc.'s (SHSE:600288) stock price dropped 11% last week; retail investors would not be happy

Key Insights

• The considerable ownership by retail investors in Daheng New Epoch Technology indicates that they collectively have a greater say in management and business strategy
• 42% of the business is held by the top 25 shareholders
• Insiders own 36% of Daheng New Epoch Technology

A look at the shareholders of Daheng New Epoch Technology Inc. (SHSE:600288) can tell us which group is most powerful. The group holding the most number of shares in the company, around 58% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 36% came under pressure after market cap dropped to CN¥4.4b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Daheng New Epoch Technology.

See our latest analysis for Daheng New Epoch Technology

What Does The Institutional Ownership Tell Us About Daheng New Epoch 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.

Daheng New Epoch Technology 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Daheng New Epoch Technology's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Daheng New Epoch Technology. Su Zhen Zheng is currently the company's largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.3% and 1.8%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Daheng New Epoch Technology

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 Daheng New Epoch Technology Inc.. Insiders have a CN¥1.6b stake in this CN¥4.4b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 58% stake in Daheng New Epoch Technology, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Daheng New Epoch Technology better, we need to consider many other factors. Take risks for example - Daheng New Epoch Technology has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.