Shenzhen Longsys Electronics Co., Ltd. (SZSE:301308) insiders have significant skin in the game with 51% ownership

Key Insights

• Shenzhen Longsys Electronics' significant insider ownership suggests inherent interests in company's expansion
• 50% of the business is held by the top 3 shareholders
• Institutional ownership in Shenzhen Longsys Electronics is 17%

Every investor in Shenzhen Longsys Electronics Co., Ltd. (SZSE:301308) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 51% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Shenzhen Longsys Electronics.

See our latest analysis for Shenzhen Longsys Electronics

What Does The Institutional Ownership Tell Us About Shenzhen Longsys Electronics?

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.

Shenzhen Longsys Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Longsys Electronics, (below). Of course, keep in mind that there are other factors to consider, too.

Shenzhen Longsys Electronics is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Huabo Cai with 39% of shares outstanding. For context, the second largest shareholder holds about 5.8% of the shares outstanding, followed by an ownership of 5.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Zhixiong Li is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Shenzhen Longsys Electronics

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.

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 own more than half of Shenzhen Longsys Electronics Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥37b, that means insiders have a whopping CN¥19b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Shenzhen Longsys Electronics. 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 Equity Ownership

With a stake of 5.8%, private equity firms could influence the Shenzhen Longsys Electronics board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 15%, of the Shenzhen Longsys Electronics stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen Longsys Electronics better, we need to consider many other factors. For example, we've discovered 4 warning signs for Shenzhen Longsys Electronics (2 are significant!) that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.