Key Insights

• The considerable ownership by retail investors in Shenzhen LihexingLtd indicates that they collectively have a greater say in management and business strategy
• 45% of the business is held by the top 25 shareholders
• 26% of Shenzhen LihexingLtd is held by insiders

If you want to know who really controls Shenzhen Lihexing Co.,Ltd. (SZSE:301013), then you'll have to look at the makeup of its share registry. With 54% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 26% shares weren't spared from last week's CN¥390m market cap drop, retail investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Shenzhen LihexingLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Shenzhen LihexingLtd?

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 Shenzhen LihexingLtd does have institutional investors; and they hold a good portion of the company's stock. 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 LihexingLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Shenzhen LihexingLtd. Looking at our data, we can see that the largest shareholder is the CEO Yipan Lin with 23% of shares outstanding. Shenzhen CMAF Management Co., Ltd. is the second largest shareholder owning 3.7% of common stock, and Shenzhen Lihexing Investment Management Enterprise (Limited Partnership) holds about 2.2% of the company stock.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shenzhen LihexingLtd

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Shenzhen Lihexing Co.,Ltd.. Insiders have a CN¥639m stake in this CN¥2.5b 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 -- including retail investors -- own 54% of Shenzhen LihexingLtd. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen LihexingLtd better, we need to consider many other factors. Be aware that Shenzhen LihexingLtd is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.