While institutions invested in Zhejiang East Crystal Electronic Co.,Ltd. (SZSE:002199) benefited from last week's 12% gain, individual investors stood to gain the most

Key Insights

• Zhejiang East Crystal ElectronicLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 11 shareholders own 51% of the company
• Insiders own 14% of Zhejiang East Crystal ElectronicLtd

To get a sense of who is truly in control of Zhejiang East Crystal Electronic Co.,Ltd. (SZSE:002199), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s CN¥295m market cap gain, institutions too had a 25% share in those profits.

In the chart below, we zoom in on the different ownership groups of Zhejiang East Crystal ElectronicLtd.

See our latest analysis for Zhejiang East Crystal ElectronicLtd

What Does The Institutional Ownership Tell Us About Zhejiang East Crystal ElectronicLtd?

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.

As you can see, institutional investors have a fair amount of stake in Zhejiang East Crystal ElectronicLtd. 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 Zhejiang East Crystal ElectronicLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Zhejiang East Crystal ElectronicLtd. The company's largest shareholder is Ningbo Meishan Free Trade Port Area Lanhai Investment Holdings Investment Management Center (LP), with ownership of 10%. Meanwhile, the second and third largest shareholders, hold 8.8% and 6.9%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang East Crystal ElectronicLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our information suggests that insiders maintain a significant holding in Zhejiang East Crystal Electronic Co.,Ltd.. Insiders own CN¥385m worth of shares in the CN¥2.7b company. 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, who are usually individual investors, hold a 44% stake in Zhejiang East Crystal ElectronicLtd. 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

We can see that Private Companies own 17%, 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. For instance, we've identified 2 warning signs for Zhejiang East Crystal ElectronicLtd (1 shouldn't be ignored) that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.