Retail investors invested in Xi'an NovaStar Tech Co., Ltd. (SZSE:301589) copped the brunt of last week's CN¥1.7b market cap decline

Key Insights

• Significant control over Xi'an NovaStar Tech by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 6 shareholders own 52% of the company
• Insider ownership in Xi'an NovaStar Tech is 42%

A look at the shareholders of Xi'an NovaStar Tech Co., Ltd. (SZSE:301589) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of retail investors took a hit after last week’s 10% price drop, insiders with their 42% also suffered.

Let's delve deeper into each type of owner of Xi'an NovaStar Tech, beginning with the chart below.

Check out our latest analysis for Xi'an NovaStar Tech

What Does The Institutional Ownership Tell Us About Xi'an NovaStar Tech?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Xi'an NovaStar Tech does have institutional investors; and they hold a good portion of the company's stock. 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 Xi'an NovaStar Tech's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Xi'an NovaStar Tech. The company's CEO Shengchun Yuan is the largest shareholder with 23% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 4.6% of the stock. Interestingly, the second-largest shareholder, Jingguo Zong is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Xi'an NovaStar Tech

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 Xi'an NovaStar Tech Co., Ltd.. It has a market capitalization of just CN¥15b, and insiders have CN¥6.3b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xi'an NovaStar Tech. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 2 warning signs we've spotted with Xi'an NovaStar Tech (including 1 which makes us a bit uncomfortable) .

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.

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