Shanghai Welltech Automation Co.,Ltd.'s (SZSE:002058) last week's 15% decline must have disappointed individual investors who have a significant stake

Key Insights

• The considerable ownership by individual investors in Shanghai Welltech AutomationLtd indicates that they collectively have a greater say in management and business strategy
• 52% of the business is held by the top 4 shareholders
• Institutional ownership in Shanghai Welltech AutomationLtd is 14%

To get a sense of who is truly in control of Shanghai Welltech Automation Co.,Ltd. (SZSE:002058), it is important to understand the ownership structure of the business. With 44% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥1.3b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Shanghai Welltech AutomationLtd.

See our latest analysis for Shanghai Welltech AutomationLtd

What Does The Institutional Ownership Tell Us About Shanghai Welltech AutomationLtd?

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.

Shanghai Welltech AutomationLtd 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Shanghai Welltech AutomationLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Shanghai Welltech AutomationLtd. The company's largest shareholder is Shanghai Zijiang (Group) Co.,Ltd., with ownership of 29%. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 7.4% by the third-largest shareholder.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Shanghai Welltech AutomationLtd

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.

Our most recent data indicates that insiders own less than 1% of Shanghai Welltech Automation Co.,Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. It seems the board members have no more than CN¥12m worth of shares in the CN¥1.3b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 44% stake in Shanghai Welltech AutomationLtd. 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

It seems that Private Companies own 42%, of the Shanghai Welltech AutomationLtd stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. To that end, you should learn about the 2 warning signs we've spotted with Shanghai Welltech AutomationLtd (including 1 which shouldn't be ignored) .

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.