Retail investors are Shanghai Hi-Tech Control System Co., Ltd's (SZSE:002184) biggest owners and were hit after market cap dropped CN¥387m

Key Insights

• Significant control over Shanghai Hi-Tech Control System by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 49% of the company
• 48% of Shanghai Hi-Tech Control System is held by insiders

If you want to know who really controls Shanghai Hi-Tech Control System Co., Ltd (SZSE:002184), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 51% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 48% shares weren’t spared from last week’s CN¥387m market cap drop, retail investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Hi-Tech Control System.

See our latest analysis for Shanghai Hi-Tech Control System

What Does The Lack Of Institutional Ownership Tell Us About Shanghai Hi-Tech Control System?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Shanghai Hi-Tech Control System might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Shanghai Hi-Tech Control System. Hong Xu is currently the largest shareholder, with 22% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 2.3%, of the shares outstanding, respectively. Mengrong Guo, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Shanghai Hi-Tech Control System

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders maintain a significant holding in Shanghai Hi-Tech Control System Co., Ltd. Insiders own CN¥2.3b worth of shares in the CN¥4.8b company. 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 -- including retail investors -- own 51% of Shanghai Hi-Tech Control System. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

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. For instance, we've identified 2 warning signs for Shanghai Hi-Tech Control System that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.