Retail investors invested in China ZhengTong Auto Services Holdings Limited (HKG:1728) copped the brunt of last week's HK$100m market cap decline

Key Insights

• China ZhengTong Auto Services Holdings' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 9 shareholders own 46% of the company
• 10% of China ZhengTong Auto Services Holdings is held by insiders

Every investor in China ZhengTong Auto Services Holdings Limited (HKG:1728) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors as a group endured the highest losses last week after market cap fell by HK$100m.

Let's delve deeper into each type of owner of China ZhengTong Auto Services Holdings, beginning with the chart below.

View our latest analysis for China ZhengTong Auto Services Holdings

What Does The Institutional Ownership Tell Us About China ZhengTong Auto Services Holdings?

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.

China ZhengTong Auto Services Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of China ZhengTong Auto Services Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in China ZhengTong Auto Services Holdings. Xiamen ITG Holding Group Co., Ltd. is currently the largest shareholder, with 29% of shares outstanding. Mui Cheung is the second largest shareholder owning 10% of common stock, and Xing Tai Capital Management Limited holds about 5.5% of the company stock.

On studying our ownership data, we found that 9 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of China ZhengTong Auto Services Holdings

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. 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.

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 China ZhengTong Auto Services Holdings Limited. Insiders have a HK$93m stake in this HK$932m business. 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

The general public, who are usually individual investors, hold a substantial 54% stake in China ZhengTong Auto Services Holdings, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 30%, of the shares on issue. 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:

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. Case in point: We've spotted 3 warning signs for China ZhengTong Auto Services Holdings you should be aware of, and 1 of them 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.