MicroTech Medical (Hangzhou) Co., Ltd.'s (HKG:2235) market cap dropped HK$384m last week; Retail investors bore the brunt

Key Insights

• MicroTech Medical (Hangzhou)'s significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 54% of the business is held by the top 6 shareholders
• Insider ownership in MicroTech Medical (Hangzhou) is 26%

Every investor in MicroTech Medical (Hangzhou) Co., Ltd. (HKG:2235) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 32% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 18% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of MicroTech Medical (Hangzhou).

See our latest analysis for MicroTech Medical (Hangzhou)

What Does The Institutional Ownership Tell Us About MicroTech Medical (Hangzhou)?

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.

MicroTech Medical (Hangzhou) 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. 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 MicroTech Medical (Hangzhou)'s historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in MicroTech Medical (Hangzhou). The company's CEO Pan Zheng is the largest shareholder with 26% of shares outstanding. Qiming Weichuang Venture Capital Management (Shanghai) Company Limited is the second largest shareholder owning 6.6% of common stock, and Eli Lilly Investment Consulting (Shanghai) Co., Ltd. holds about 6.1% of the company stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 MicroTech Medical (Hangzhou)

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

It seems insiders own a significant proportion of MicroTech Medical (Hangzhou) Co., Ltd.. It has a market capitalization of just HK$1.8b, and insiders have HK$464m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MicroTech Medical (Hangzhou). 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 29% stake in MicroTech Medical (Hangzhou). 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand MicroTech Medical (Hangzhou) better, we need to consider many other factors. Be aware that MicroTech Medical (Hangzhou) is showing 1 warning sign in our investment analysis , you should know about...

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.