Dareway Software Co.,Ltd.'s (SHSE:688579) last week's 9.9% decline must have disappointed individual investors who have a significant stake

Key Insights

• The considerable ownership by individual investors in Dareway SoftwareLtd indicates that they collectively have a greater say in management and business strategy
• A total of 7 investors have a majority stake in the company with 52% ownership
• Insider ownership in Dareway SoftwareLtd is 20%

A look at the shareholders of Dareway Software Co.,Ltd. (SHSE:688579) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 37% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥3.7b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Dareway SoftwareLtd.

View our latest analysis for Dareway SoftwareLtd

What Does The Institutional Ownership Tell Us About Dareway SoftwareLtd?

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 Dareway SoftwareLtd. 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. 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 Dareway SoftwareLtd's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Dareway SoftwareLtd. The company's largest shareholder is Shandong Shanda Capital Operation Co., Ltd., with ownership of 30%. With 5.0% and 3.5% of the shares outstanding respectively, China Life Private Equity Investment Co., Ltd. and Xiaoguang Hong are the second and third largest shareholders. Xiaoguang Hong, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

We did some more digging and found that 7 of the top shareholders account for roughly 52% 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Dareway SoftwareLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 a reasonable proportion of Dareway Software Co.,Ltd.. It has a market capitalization of just CN¥3.7b, and insiders have CN¥720m worth of shares in their own names. 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

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dareway SoftwareLtd. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

Private equity firms hold a 5.0% stake in Dareway SoftwareLtd. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 32%, of the shares on issue. 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 Dareway SoftwareLtd better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Dareway SoftwareLtd you should be aware of, and 1 of them is a bit unpleasant.

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.