Key Insights

• Significant insider control over Halo Microelectronics implies vested interests in company growth
• 52% of the business is held by the top 4 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Halo Microelectronics Co., Ltd. (SHSE:688173), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 43% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 8.5% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Halo Microelectronics.

What Does The Institutional Ownership Tell Us About Halo Microelectronics?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

Hedge funds don't have many shares in Halo Microelectronics. Looking at our data, we can see that the largest shareholder is the CEO Hai Tao with 23% of shares outstanding. Ya Tang is the second largest shareholder owning 14% of common stock, and Chongqing Weichun Enterprise Management Consulting Co., Ltd. holds about 9.2% of the company stock. Interestingly, the second-largest shareholder, Ya Tang is also Chief Financial Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of 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. 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 Halo Microelectronics

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.

It seems insiders own a significant proportion of Halo Microelectronics Co., Ltd.. Insiders have a CN¥2.0b stake in this CN¥4.7b 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

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Halo Microelectronics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 5.0%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 20%, of the Halo Microelectronics 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Halo Microelectronics better, we need to consider many other factors. For example, we've discovered 2 warning signs for Halo Microelectronics (1 can't be ignored!) that you should be aware of before investing here.

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.