Key Insights

• Significant control over LB Group by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 8 investors have a majority stake in the company with 51% ownership
• Insiders own 32% of LB Group

Every investor in LB Group Co., Ltd. (SZSE:002601) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 32% came under pressure after market cap dropped to CN¥37b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about LB Group.

What Does The Institutional Ownership Tell Us About LB Group?

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 LB Group does have institutional investors; and they hold a good portion of the company's stock. 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. 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 LB Group, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in LB Group. The company's largest shareholder is Estate Of Xu Gang, with ownership of 14%. Ran Xu is the second largest shareholder owning 13% of common stock, and Rui Qing Tan holds about 8.3% of the company stock. Ran Xu, who is the second-largest shareholder, also happens to hold the title of Head of Sales.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of LB Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of LB Group Co., Ltd.. It has a market capitalization of just CN¥37b, and insiders have CN¥12b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 37% stake in LB Group. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 17%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with LB Group (including 1 which is significant) .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.