With 51% ownership, Shenzhen Longsys Electronics Co., Ltd. (SZSE:301308) insiders have a lot at stake

Key Insights

• Significant insider control over Shenzhen Longsys Electronics implies vested interests in company growth
• 51% of the business is held by the top 3 shareholders
• 17% of Shenzhen Longsys Electronics is held by Institutions

Every investor in Shenzhen Longsys Electronics Co., Ltd. (SZSE:301308) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

So it follows, every decision made by insiders of Shenzhen Longsys Electronics regarding the company's future would be crucial to them.

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

Check out 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.

We can see that Shenzhen Longsys Electronics does have institutional investors; and they hold a good portion of the company's stock. 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. 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. With a 39% stake, CEO Huabo Cai is the largest shareholder. With 6.2% and 5.6% of the shares outstanding respectively, Huaxin Investment Management Co., Ltd. and Zhixiong Li are the second and third largest shareholders. 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.

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. 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

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems that insiders own more than half the Shenzhen Longsys Electronics Co., Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful CN¥16b stake in this CN¥31b business. 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-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 6.2% stake in Shenzhen Longsys Electronics. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 15%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Shenzhen Longsys Electronics you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.