Retail investors among Capitalonline Data Service Co., Ltd.'s (SZSE:300846) largest stockholders and were hit after last week's 6.0% price drop

Key Insights

• Significant control over Capitalonline Data Service by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 42% ownership
• 30% of Capitalonline Data Service is held by insiders

To get a sense of who is truly in control of Capitalonline Data Service Co., Ltd. (SZSE:300846), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 58% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 6.0% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 30% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Capitalonline Data Service.

View our latest analysis for Capitalonline Data Service

What Does The Institutional Ownership Tell Us About Capitalonline Data Service?

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.

Capitalonline Data Service already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Capitalonline Data Service's historic earnings and revenue below, but keep in mind there's always more to the story.

Capitalonline Data Service is not owned by hedge funds. The company's CEO Ning Qu is the largest shareholder with 24% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.3% and 2.0% of the stock. Interestingly, the second-largest shareholder, Yongzhi Zhao is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Capitalonline Data Service

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.

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 Capitalonline Data Service Co., Ltd.. It has a market capitalization of just CN¥6.8b, and insiders have CN¥2.0b 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

The general public, mostly comprising of individual investors, collectively holds 58% of Capitalonline Data Service shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 3.6%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Capitalonline Data Service is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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.