Shenzhen Kinwong Electronic Co., Ltd. (SHSE:603228) insiders, who hold 63% of the firm would be disappointed by the recent pullback

Key Insights

• Insiders appear to have a vested interest in Shenzhen Kinwong Electronic's growth, as seen by their sizeable ownership
• The top 2 shareholders own 63% of the company
• 13% of Shenzhen Kinwong Electronic is held by Institutions

Every investor in Shenzhen Kinwong Electronic Co., Ltd. (SHSE:603228) 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 individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 5.6% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Shenzhen Kinwong Electronic.

See our latest analysis for Shenzhen Kinwong Electronic

What Does The Institutional Ownership Tell Us About Shenzhen Kinwong Electronic?

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.

Shenzhen Kinwong Electronic already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Kinwong Electronic's historic earnings and revenue below, but keep in mind there's always more to the story.

Shenzhen Kinwong Electronic is not owned by hedge funds. Xiao Fen Huang is currently the company's largest shareholder with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 31% and 4.1%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Shenzhen Kinwong Electronic

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. 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 information suggests that insiders own more than half of Shenzhen Kinwong Electronic Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥25b, that means insiders have a whopping CN¥15b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Kinwong Electronic. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shenzhen Kinwong Electronic better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Shenzhen Kinwong Electronic you should be aware of.

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.