Shanghai REFIRE Group Limited's (HKG:2570) stock price dropped 7.6% last week; individual investors would not be happy

Key Insights

• Significant control over Shanghai REFIRE Group by individual investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 7 shareholders
• 20% of Shanghai REFIRE Group is held by insiders

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If you want to know who really controls Shanghai REFIRE Group Limited (HKG:2570), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 30% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 7.6% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 20% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Shanghai REFIRE Group.

Check out our latest analysis for Shanghai REFIRE Group

What Does The Institutional Ownership Tell Us About Shanghai REFIRE Group?

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 Shanghai REFIRE Group 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. 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 Shanghai REFIRE Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Shanghai REFIRE Group is not owned by hedge funds. With a 14% stake, CEO Qi Lin is the largest shareholder. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 6.9% by the third-largest shareholder.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shanghai REFIRE Group

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

It seems insiders own a significant proportion of Shanghai REFIRE Group Limited. It is very interesting to see that insiders have a meaningful HK$2.5b stake in this HK$12b business. 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

The general public, who are usually individual investors, hold a 30% stake in Shanghai REFIRE Group. 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 13% stake in Shanghai REFIRE Group. 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 19%, 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. Take risks for example - Shanghai REFIRE Group has 1 warning sign we think you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.