Both retail investors who control a good portion of Sichuan Etrol Technologies Co., Ltd. (SZSE:300370) along with institutions must be dismayed after last week's 14% decrease

Key Insights

• Significant control over Sichuan Etrol Technologies by retail investors implies that the general public has more power to influence management and governance-related decisions
• 44% of the business is held by the top 21 shareholders
• Institutions own 20% of Sichuan Etrol Technologies

To get a sense of who is truly in control of Sichuan Etrol Technologies Co., Ltd. (SZSE:300370), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 56% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 20% came under pressure after market cap dropped to CN¥5.2b last week,retail investors took the most losses.

Let's delve deeper into each type of owner of Sichuan Etrol Technologies, beginning with the chart below.

Check out our latest analysis for Sichuan Etrol Technologies

What Does The Institutional Ownership Tell Us About Sichuan Etrol Technologies?

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.

Sichuan Etrol Technologies already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Sichuan Etrol Technologies' earnings history below. Of course, the future is what really matters.

Sichuan Etrol Technologies is not owned by hedge funds. Yibin Xuzhou District Chuangyi Industrial Investment Co., Ltd. is currently the company's largest shareholder with 15% of shares outstanding. Shenzhen High-Tech Investment Group Co., Ltd., Asset Management Arm is the second largest shareholder owning 14% of common stock, and Ling Yu holds about 6.6% of the company stock.

A deeper look at our ownership data shows that the top 21 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. 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 Sichuan Etrol Technologies

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

We can report that insiders do own shares in Sichuan Etrol Technologies Co., Ltd.. It has a market capitalization of just CN¥5.2b, and insiders have CN¥418m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 56% stake in Sichuan Etrol Technologies, suggesting it is a fairly popular stock. 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 Company Ownership

Our data indicates that Private Companies hold 15%, of the company's shares. 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. Take risks for example - Sichuan Etrol Technologies has 2 warning signs we think you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.