Flaircomm Microelectronics, Inc. (SZSE:301600) surges 12%; private companies who own 37% shares profited along with insiders

Key Insights

• Significant control over Flaircomm Microelectronics by private companies implies that the general public has more power to influence management and governance-related decisions
• 69% of the business is held by the top 2 shareholders
• Insiders own 35% of Flaircomm Microelectronics

If you want to know who really controls Flaircomm Microelectronics, Inc. (SZSE:301600), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 37% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Private companies gained the most after market cap touched CN¥5.6b last week, while insiders who own 35% also benefitted.

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

See our latest analysis for Flaircomm Microelectronics

What Does The Institutional Ownership Tell Us About Flaircomm Microelectronics?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Institutions have a very small stake in Flaircomm Microelectronics. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

We note that hedge funds don't have a meaningful investment in Flaircomm Microelectronics. Guoying Chen is currently the company's largest shareholder with 35% of shares outstanding. In comparison, the second and third largest shareholders hold about 34% and 2.7% of the stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Flaircomm Microelectronics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Flaircomm Microelectronics, Inc.. It has a market capitalization of just CN¥5.6b, and insiders have CN¥2.0b worth of shares in their own names. 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, who are usually individual investors, hold a 25% stake in Flaircomm Microelectronics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 37%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Flaircomm Microelectronics , and understanding them should be part of your investment process.

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.