Retail investors who have a significant stake must be disappointed along with institutions after Transwarp Technology (Shanghai) Co.,Ltd.'s (SHSE:688031) market cap dropped by CN¥1.0b

Key Insights

• Significant control over Transwarp Technology (Shanghai)Ltd by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 11 investors have a majority stake in the company with 52% ownership
• Insider ownership in Transwarp Technology (Shanghai)Ltd is 16%

To get a sense of who is truly in control of Transwarp Technology (Shanghai) Co.,Ltd. (SHSE:688031), it is important to understand the ownership structure of the business. With 30% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 29% came under pressure after market cap dropped to CN¥5.7b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Transwarp Technology (Shanghai)Ltd.

View our latest analysis for Transwarp Technology (Shanghai)Ltd

What Does The Institutional Ownership Tell Us About Transwarp Technology (Shanghai)Ltd?

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.

We can see that Transwarp Technology (Shanghai)Ltd does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Transwarp Technology (Shanghai)Ltd's earnings history below. Of course, the future is what really matters.

Transwarp Technology (Shanghai)Ltd is not owned by hedge funds. With a 9.2% stake, CEO Yuanhao Sun is the largest shareholder. With 8.8% and 6.2% of the shares outstanding respectively, Linzhi Lichuang Information Technology Co., Ltd. and Shanghai Zanxing Investment Center (Limited Partnership) are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 52% implying that no single shareholder has a majority.

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 Transwarp Technology (Shanghai)Ltd

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.

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.

It seems insiders own a significant proportion of Transwarp Technology (Shanghai) Co.,Ltd.. Insiders have a CN¥891m stake in this CN¥5.7b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Transwarp Technology (Shanghai)Ltd. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 5.6% stake in Transwarp Technology (Shanghai)Ltd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 19%, of the Transwarp Technology (Shanghai)Ltd 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 2 warning signs we've spotted with Transwarp Technology (Shanghai)Ltd (including 1 which can't be ignored) .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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.