Shenzhen Infinova Limited's (SZSE:002528) market cap dropped CN¥671m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Shenzhen Infinova indicates that they collectively have a greater say in management and business strategy
• A total of 3 investors have a majority stake in the company with 59% ownership
• 33% of Shenzhen Infinova is held by insiders

If you want to know who really controls Shenzhen Infinova Limited (SZSE:002528), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 42% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 33% shares weren’t spared from last week’s CN¥671m market cap drop, private companies as a group suffered the maximum losses

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

See our latest analysis for Shenzhen Infinova

What Does The Lack Of Institutional Ownership Tell Us About Shenzhen Infinova?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Shenzhen Infinova, for yourself, below.

Shenzhen Infinova is not owned by hedge funds. Shenzhen Investment Holdings Co., Ltd is currently the company's largest shareholder with 26% of shares outstanding. The second and third largest shareholders are Jeffrey Zhaohuailiu and Zhaohuai Liu, with an equal amount of shares to their name at 16%. Zhaohuai Liu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 59% stake.

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 Shenzhen Infinova

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Shenzhen Infinova Limited. Insiders own CN¥1.3b worth of shares in the CN¥3.8b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 24% stake in Shenzhen Infinova. 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 Company Ownership

We can see that Private Companies own 42%, 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. Case in point: We've spotted 1 warning sign for Shenzhen Infinova 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.