Retail investors among Cheng Uei Precision Industry Co., Ltd.'s (TWSE:2392) largest stockholders and were hit after last week's 6.1% price drop

Key Insights

• The considerable ownership by retail investors in Cheng Uei Precision Industry indicates that they collectively have a greater say in management and business strategy
• The top 11 shareholders own 51% of the company
• 10% of Cheng Uei Precision Industry is held by Institutions

To get a sense of who is truly in control of Cheng Uei Precision Industry Co., Ltd. (TWSE:2392), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to NT$31b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Cheng Uei Precision Industry, beginning with the chart below.

View our latest analysis for Cheng Uei Precision Industry

What Does The Institutional Ownership Tell Us About Cheng Uei Precision Industry?

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.

We can see that Cheng Uei Precision Industry does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Cheng Uei Precision Industry's historic earnings and revenue below, but keep in mind there's always more to the story.

Cheng Uei Precision Industry is not owned by hedge funds. Our data shows that Xinhong International Investment Co., Ltd. is the largest shareholder with 22% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 7.0% by the third-largest shareholder. Additionally, the company's CEO Taiqiang Guo directly holds 1.3% of the total shares outstanding.

After doing some more digging, we found that the top 11 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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. 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 Cheng Uei Precision Industry

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.

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.

We can see that insiders own shares in Cheng Uei Precision Industry Co., Ltd.. As individuals, the insiders collectively own NT$470m worth of the NT$31b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 48% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 30%, of the Cheng Uei Precision Industry stock. 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 11% of Cheng Uei Precision Industry 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Cheng Uei Precision Industry (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

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.