Following recent decline, Shenzhen Hui Chuang Da Technology Co., Ltd.'s (SZSE:300909) top shareholder CEO Ming Li sees holdings value drop by 10%

Key Insights

• Significant insider control over Shenzhen Hui Chuang Da Technology implies vested interests in company growth
• The top 3 shareholders own 53% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Shenzhen Hui Chuang Da Technology Co., Ltd. (SZSE:300909) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥3.3b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

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

See our latest analysis for Shenzhen Hui Chuang Da Technology

What Does The Institutional Ownership Tell Us About Shenzhen Hui Chuang Da 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.

As you can see, institutional investors have a fair amount of stake in Shenzhen Hui Chuang Da Technology. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Shenzhen Hui Chuang Da Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Shenzhen Hui Chuang Da Technology. The company's CEO Ming Li is the largest shareholder with 30% of shares outstanding. With 17% and 5.4% of the shares outstanding respectively, Ningbo Tongmu Venture Capital Partnership Enterprise (Limited Partnership) and Shuyuan Zhang are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Hui Chuang Da Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Shenzhen Hui Chuang Da Technology Co., Ltd.. It has a market capitalization of just CN¥3.3b, and insiders have CN¥1.5b worth of shares in their own names. 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-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. 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.

Private Company Ownership

Our data indicates that Private Companies hold 18%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen Hui Chuang Da Technology better, we need to consider many other factors. Be aware that Shenzhen Hui Chuang Da Technology is showing 3 warning signs in our investment analysis , you should know about...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com