Suzhou Dongshan Precision Manufacturing Co., Ltd.'s (SZSE:002384) market cap dropped CN¥1.3b last week; Individual investors bore the brunt

Key Insights

• Significant control over Suzhou Dongshan Precision Manufacturing by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 48% of the company
• Insider ownership in Suzhou Dongshan Precision Manufacturing is 29%

Every investor in Suzhou Dongshan Precision Manufacturing Co., Ltd. (SZSE:002384) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 29% shares weren’t spared from last week’s CN¥1.3b market cap drop, individual investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Suzhou Dongshan Precision Manufacturing.

See our latest analysis for Suzhou Dongshan Precision Manufacturing

What Does The Institutional Ownership Tell Us About Suzhou Dongshan Precision Manufacturing?

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 Suzhou Dongshan Precision Manufacturing. 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 Suzhou Dongshan Precision Manufacturing, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Suzhou Dongshan Precision Manufacturing. With a 13% stake, CEO Yongfeng Yuan is the largest shareholder. Yonggang Yuan is the second largest shareholder owning 12% of common stock, and Fugen Yuan holds about 3.5% of the company stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Suzhou Dongshan Precision Manufacturing

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Suzhou Dongshan Precision Manufacturing Co., Ltd.. It has a market capitalization of just CN¥34b, and insiders have CN¥9.8b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 47% stake in Suzhou Dongshan Precision Manufacturing. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Suzhou Dongshan Precision Manufacturing better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Suzhou Dongshan Precision Manufacturing (including 1 which makes us a bit uncomfortable) .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.