Key Insights

• The considerable ownership by individual investors in Shenzhen Farben Information TechnologyLtd indicates that they collectively have a greater say in management and business strategy
• 50% of the business is held by the top 16 shareholders
• 30% of Shenzhen Farben Information TechnologyLtd is held by insiders

To get a sense of who is truly in control of Shenzhen Farben Information Technology Co.,Ltd. (SZSE:300925), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 47% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of individual investors took a hit after last week's 10% price drop, insiders with their 30% also suffered.

In the chart below, we zoom in on the different ownership groups of Shenzhen Farben Information TechnologyLtd.

What Does The Institutional Ownership Tell Us About Shenzhen Farben Information TechnologyLtd?

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.

Shenzhen Farben Information TechnologyLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Shenzhen Farben Information TechnologyLtd's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shenzhen Farben Information TechnologyLtd. Looking at our data, we can see that the largest shareholder is the CEO Hua Yan with 25% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.0% and 2.5% of the stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 16 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. 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 Shenzhen Farben Information TechnologyLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Shenzhen Farben Information Technology Co.,Ltd.. Insiders own CN¥3.3b worth of shares in the CN¥11b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Farben Information TechnologyLtd. 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 13%, of the shares on issue. 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:

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 2 warning signs for Shenzhen Farben Information TechnologyLtd (1 is a bit concerning!) 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.