Shenzhen JPT Opto-Electronics Co., Ltd.'s (SHSE:688025) market cap increased by CN¥556m, insiders receive a 27% cut

Key Insights

• Shenzhen JPT Opto-Electronics' significant insider ownership suggests inherent interests in company's expansion
• 53% of the business is held by the top 6 shareholders
• 27% of Shenzhen JPT Opto-Electronics is held by Institutions

Every investor in Shenzhen JPT Opto-Electronics Co., Ltd. (SHSE:688025) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 27% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit CN¥3.5b market cap following a 19% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Shenzhen JPT Opto-Electronics.

View our latest analysis for Shenzhen JPT Opto-Electronics

What Does The Institutional Ownership Tell Us About Shenzhen JPT Opto-Electronics?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Shenzhen JPT Opto-Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Shenzhen JPT Opto-Electronics' historic earnings and revenue below, but keep in mind there's always more to the story.

Shenzhen JPT Opto-Electronics is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Huang Zhijia with 24% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 5.1% of the stock.

We did some more digging and found that 6 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shenzhen JPT Opto-Electronics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Shenzhen JPT Opto-Electronics Co., Ltd.. It has a market capitalization of just CN¥3.5b, and insiders have CN¥936m 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-- including retail investors -- own 27% 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.

Private Company Ownership

Our data indicates that Private Companies hold 15%, of the company's shares. 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. For example, we've discovered 1 warning sign for Shenzhen JPT Opto-Electronics that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.