Guangdong Aofei Data Technology Co., Ltd.'s (SZSE:300738) last week's 17% decline must have disappointed individual investors who have a significant stake

Simply Wall St · 10/16 00:39

Key Insights

  • The considerable ownership by individual investors in Guangdong Aofei Data Technology indicates that they collectively have a greater say in management and business strategy
  • A total of 25 investors have a majority stake in the company with 50% ownership
  • Institutions own 12% of Guangdong Aofei Data Technology

If you want to know who really controls Guangdong Aofei Data Technology Co., Ltd. (SZSE:300738), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 50% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥11b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Guangdong Aofei Data Technology, beginning with the chart below.

See our latest analysis for Guangdong Aofei Data Technology

ownership-breakdown
SZSE:300738 Ownership Breakdown October 16th 2024

What Does The Institutional Ownership Tell Us About Guangdong Aofei Data Technology?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Guangdong Aofei Data Technology 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 Guangdong Aofei Data Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SZSE:300738 Earnings and Revenue Growth October 16th 2024

Guangdong Aofei Data Technology is not owned by hedge funds. Guangzhou Haomeng Computer Technology Co., Ltd. is currently the company's largest shareholder with 28% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.6% and 3.6%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Guangdong Aofei Data Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Shareholders would probably be interested to learn that insiders own shares in Guangdong Aofei Data Technology Co., Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥1.1b worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 50% stake in the company, and hence can't easily be ignored. 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 28%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Be aware that Guangdong Aofei Data Technology is showing 4 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

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.