Key Insights

• Significant control over Dongguan Mentech Optical & Magnetic by individual investors implies that the general public has more power to influence management and governance-related decisions
• 46% of the business is held by the top 25 shareholders
• Insider ownership in Dongguan Mentech Optical & Magnetic is 35%

To get a sense of who is truly in control of Dongguan Mentech Optical & Magnetic Co., Ltd. (SZSE:002902), it is important to understand the ownership structure of the business. With 54% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders, who own 35% shares weren't spared from last week's CN¥427m market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Dongguan Mentech Optical & Magnetic, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Dongguan Mentech Optical & Magnetic?

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 Dongguan Mentech Optical & Magnetic. 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 Dongguan Mentech Optical & Magnetic's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Dongguan Mentech Optical & Magnetic. Our data shows that Dong Yang is the largest shareholder with 32% of shares outstanding. With 1.8% and 1.2% of the shares outstanding respectively, Caihong Jiao and China Merchants Securities Asset Management Co., Ltd. are the second and third largest shareholders.

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 a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Dongguan Mentech Optical & Magnetic

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our most recent data indicates that insiders own a reasonable proportion of Dongguan Mentech Optical & Magnetic Co., Ltd.. It has a market capitalization of just CN¥4.9b, and insiders have CN¥1.7b worth of shares in their own names. 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 -- including retail investors -- own 54% of Dongguan Mentech Optical & Magnetic. 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. Take risks for example - Dongguan Mentech Optical & Magnetic has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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.