Key Insights

• The considerable ownership by retail investors in Smarter Microelectronics (Guangzhou) indicates that they collectively have a greater say in management and business strategy
• 48% of the business is held by the top 25 shareholders
• Insiders own 12% of Smarter Microelectronics (Guangzhou)

If you want to know who really controls Smarter Microelectronics (Guangzhou) Co., Ltd. (SHSE:688512), then you'll have to look at the makeup of its share registry. With 52% 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.

Following a 16% increase in the stock price last week, retail investors profited the most, but institutions who own 18% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Smarter Microelectronics (Guangzhou).

What Does The Institutional Ownership Tell Us About Smarter Microelectronics (Guangzhou)?

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.

We can see that Smarter Microelectronics (Guangzhou) 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. 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 Smarter Microelectronics (Guangzhou)'s historic earnings and revenue below, but keep in mind there's always more to the story.

Smarter Microelectronics (Guangzhou) is not owned by hedge funds. The company's largest shareholder is Li Yang, with ownership of 7.4%. For context, the second largest shareholder holds about 5.6% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Smarter Microelectronics (Guangzhou)

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Smarter Microelectronics (Guangzhou) Co., Ltd.. Insiders have a CN¥464m stake in this CN¥4.0b 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, mostly comprising of individual investors, collectively holds 52% of Smarter Microelectronics (Guangzhou) shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

Private equity firms hold a 5.6% stake in Smarter Microelectronics (Guangzhou). This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that Private Companies hold 12%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Smarter Microelectronics (Guangzhou) better, we need to consider many other factors. Be aware that Smarter Microelectronics (Guangzhou) is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.