Retail investors invested in Shenzhen Emperor Technology Co., Ltd. (SZSE:300546) copped the brunt of last week's CN¥234m market cap decline

Key Insights

• Significant control over Shenzhen Emperor Technology by retail investors implies that the general public has more power to influence management and governance-related decisions
• 48% of the business is held by the top 25 shareholders
• Insiders own 40% of Shenzhen Emperor Technology

If you want to know who really controls Shenzhen Emperor Technology Co., Ltd. (SZSE:300546), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 13% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 40% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Shenzhen Emperor Technology.

See our latest analysis for Shenzhen Emperor Technology

What Does The Institutional Ownership Tell Us About Shenzhen Emperor Technology?

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.

We can see that Shenzhen Emperor Technology does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Shenzhen Emperor Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Shenzhen Emperor Technology is not owned by hedge funds. Jing Gao is currently the company's largest shareholder with 32% of shares outstanding. With 5.7% and 2.7% of the shares outstanding respectively, Song Zheng and Invesco Great Wall Fund Management Co. Ltd are the second and third largest shareholders. Song Zheng, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 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 Emperor Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Shenzhen Emperor Technology Co., Ltd.. Insiders own CN¥651m worth of shares in the CN¥1.6b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 52% of Shenzhen Emperor Technology. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen Emperor Technology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Shenzhen Emperor Technology (of which 1 is concerning!) you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.