Sichuan Swellfun Co.,Ltd's (SHSE:600779) stock price dropped 17% last week; public companies would not be happy

Key Insights

• Sichuan SwellfunLtd's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The largest shareholder of the company is Diageo plc with a 63% stake
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in Sichuan Swellfun Co.,Ltd (SHSE:600779) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 63% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, public companies endured the biggest losses as the stock fell by 17%.

In the chart below, we zoom in on the different ownership groups of Sichuan SwellfunLtd.

See our latest analysis for Sichuan SwellfunLtd

What Does The Institutional Ownership Tell Us About Sichuan SwellfunLtd?

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.

As you can see, institutional investors have a fair amount of stake in Sichuan SwellfunLtd. 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 Sichuan SwellfunLtd's earnings history below. Of course, the future is what really matters.

Sichuan SwellfunLtd is not owned by hedge funds. Our data shows that Diageo plc is the largest shareholder with 63% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 3.2% and 0.6% of the stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Sichuan SwellfunLtd

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. 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 less than 1% of Sichuan Swellfun Co.,Ltd. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥113m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 28% stake in Sichuan SwellfunLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

It appears to us that public companies own 63% of Sichuan SwellfunLtd. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Sichuan SwellfunLtd has 2 warning signs (and 1 which is concerning) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.