Key Insights

• The considerable ownership by retail investors in Shenzhen Gongjin Electronics indicates that they collectively have a greater say in management and business strategy
• 49% of the business is held by the top 25 shareholders
• Insider ownership in Shenzhen Gongjin Electronics is 42%

Every investor in Shenzhen Gongjin Electronics Co., Ltd. (SHSE:603118) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 51% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Retail investors gained the most after market cap touched CN¥7.3b last week, while insiders who own 42% also benefitted.

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

What Does The Institutional Ownership Tell Us About Shenzhen Gongjin Electronics?

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.

As you can see, institutional investors have a fair amount of stake in Shenzhen Gongjin Electronics. 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 Shenzhen Gongjin Electronics' historic earnings and revenue below, but keep in mind there's always more to the story.

Shenzhen Gongjin Electronics is not owned by hedge funds. Fo Nan Tang is currently the largest shareholder, with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 1.3%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Shenzhen Gongjin Electronics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Shenzhen Gongjin Electronics Co., Ltd.. Insiders have a CN¥3.1b stake in this CN¥7.3b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 51% stake in Shenzhen Gongjin Electronics, 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Shenzhen Gongjin Electronics that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.