Retail investors are Hengfeng Information Technology Co., Ltd.'s (SZSE:300605) biggest owners and were hit after market cap dropped CN¥211m

Key Insights

• The considerable ownership by retail investors in Hengfeng Information Technology indicates that they collectively have a greater say in management and business strategy
• The top 16 shareholders own 50% of the company
• Insider ownership in Hengfeng Information Technology is 46%

A look at the shareholders of Hengfeng Information Technology Co., Ltd. (SZSE:300605) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 13% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 46% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Hengfeng Information Technology.

Check out our latest analysis for Hengfeng Information Technology

What Does The Institutional Ownership Tell Us About Hengfeng Information Technology?

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.

Less than 5% of Hengfeng Information Technology is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

Hengfeng Information Technology is not owned by hedge funds. Xiao Xi Wei is currently the company's largest shareholder with 29% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 3.2% by the third-largest shareholder. Lin Jie Ou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 16 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. 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 Hengfeng Information Technology

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in Hengfeng Information Technology Co., Ltd.. Insiders own CN¥617m worth of shares in the CN¥1.4b company. 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-- including retail investors -- own 49% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 4 warning signs for Hengfeng Information Technology (2 are a bit unpleasant) that you should be aware of.

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.