iDreamSky Technology Holdings Limited's (HKG:1119) market cap dropped HK$523m last week; Retail investors bore the brunt

Key Insights

• The considerable ownership by retail investors in iDreamSky Technology Holdings indicates that they collectively have a greater say in management and business strategy
• A total of 12 investors have a majority stake in the company with 50% ownership
• 17% of iDreamSky Technology Holdings is held by insiders

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To get a sense of who is truly in control of iDreamSky Technology Holdings Limited (HKG:1119), it is important to understand the ownership structure of the business. With 50% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 17% came under pressure after market cap dropped to HK$1.7b last week,retail investors took the most losses.

Let's delve deeper into each type of owner of iDreamSky Technology Holdings, beginning with the chart below.

View our latest analysis for iDreamSky Technology Holdings

What Does The Institutional Ownership Tell Us About iDreamSky Technology Holdings?

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.

Less than 5% of iDreamSky Technology Holdings is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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.

Hedge funds don't have many shares in iDreamSky Technology Holdings. Looking at our data, we can see that the largest shareholder is the CEO Xiangyu Chen with 15% of shares outstanding. With 14% and 10% of the shares outstanding respectively, Tencent Holdings Limited and PLR Worldwide Sales Limited are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of iDreamSky Technology Holdings

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of iDreamSky Technology Holdings Limited. Insiders have a HK$290m stake in this HK$1.7b business. 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

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over iDreamSky Technology Holdings. 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 15%, 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.

Public Company Ownership

Public companies currently own 14% of iDreamSky Technology Holdings stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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 - iDreamSky Technology Holdings has 2 warning signs (and 1 which can't be ignored) we think you should know about.

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.