Private companies who have a significant stake must be disappointed along with institutions after Beijing Labtech Instruments Co., Ltd.'s (SHSE:688056) market cap dropped by CN¥217m

Key Insights

• Beijing Labtech Instruments' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 2 investors have a majority stake in the company with 60% ownership
• 19% of Beijing Labtech Instruments is held by Institutions

A look at the shareholders of Beijing Labtech Instruments Co., Ltd. (SHSE:688056) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 60% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 14% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 19% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Beijing Labtech Instruments.

View our latest analysis for Beijing Labtech Instruments

What Does The Institutional Ownership Tell Us About Beijing Labtech Instruments?

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.

As you can see, institutional investors have a fair amount of stake in Beijing Labtech Instruments. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Beijing Labtech Instruments' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Beijing Labtech Instruments. Looking at our data, we can see that the largest shareholder is Beijing Labtech Management Consulting Co., Ltd. with 36% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 24% and 4.5%, of the shares outstanding, respectively. In addition, we found that Ke Hu, the CEO has 0.7% of the shares allocated to their name.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Beijing Labtech Instruments

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Beijing Labtech Instruments Co., Ltd.. As individuals, the insiders collectively own CN¥94m worth of the CN¥1.4b company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Beijing Labtech Instruments. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 60%, of the Beijing Labtech Instruments stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Beijing Labtech Instruments (including 1 which can't be ignored) .

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.

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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.