Newcapec Electronics Co., Ltd. (SZSE:300248) surges 7.3%; retail investors who own 56% shares profited along with insiders

Key Insights

• Significant control over Newcapec Electronics by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 44% of the company
• Insider ownership in Newcapec Electronics is 38%

To get a sense of who is truly in control of Newcapec Electronics Co., Ltd. (SZSE:300248), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 7.3% increase in the stock price last week, retail investors profited the most, but insiders who own 38% stock also stood to gain from the increase.

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

See our latest analysis for Newcapec Electronics

What Does The Lack Of Institutional Ownership Tell Us About Newcapec Electronics?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Newcapec Electronics might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Newcapec Electronics. The company's CEO Weiguo Yan is the largest shareholder with 15% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.0% and 3.1% of the stock. Interestingly, the third-largest shareholder, Mengyang Hua is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Newcapec Electronics

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.

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 Newcapec Electronics Co., Ltd.. It has a market capitalization of just CN¥5.8b, and insiders have CN¥2.2b worth of shares in their own names. 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, mostly comprising of individual investors, collectively holds 56% of Newcapec Electronics shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

With a stake of 5.0%, private equity firms could influence the Newcapec Electronics board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

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

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.