Private equity firms in Everdisplay Optronics (Shanghai) Co., Ltd. (SHSE:688538) are its biggest bettors, and their bets paid off as stock gained 3.5% last week

Key Insights

• The considerable ownership by private equity firms in Everdisplay Optronics (Shanghai) indicates that they collectively have a greater say in management and business strategy
• Shanghai Alliance Investment Ltd. owns 58% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Everdisplay Optronics (Shanghai) Co., Ltd. (SHSE:688538) can tell us which group is most powerful. We can see that private equity firms own the lion's share in the company with 71% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private equity firms collectively scored the highest last week as the company hit CN¥29b market cap following a 3.5% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Everdisplay Optronics (Shanghai).

See our latest analysis for Everdisplay Optronics (Shanghai)

What Does The Institutional Ownership Tell Us About Everdisplay Optronics (Shanghai)?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Everdisplay Optronics (Shanghai) 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Everdisplay Optronics (Shanghai), (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Everdisplay Optronics (Shanghai). Shanghai Alliance Investment Ltd. is currently the largest shareholder, with 58% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Shanghai Integrated Circuit Industry Investment Fund Management Co., Ltd. is the second largest shareholder owning 13% of common stock, and Shanghai Xinjinshan Industrial Investment Development Co.,Ltd. holds about 3.1% of the company stock.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Everdisplay Optronics (Shanghai)

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.

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 less than 1% of Everdisplay Optronics (Shanghai) Co., Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥17m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 17% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 71%, private equity firms could influence the Everdisplay Optronics (Shanghai) board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 4.0%, of the Everdisplay Optronics (Shanghai) stock. 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:

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 example, we've discovered 2 warning signs for Everdisplay Optronics (Shanghai) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com