Positive week for Zbit Semiconductor, Inc. (SHSE:688416) institutional investors who lost 42% over the past year

Simply Wall St · 10/18 23:33

Key Insights

  • Given the large stake in the stock by institutions, Zbit Semiconductor's stock price might be vulnerable to their trading decisions
  • 51% of the business is held by the top 7 shareholders
  • 29% of Zbit Semiconductor is held by insiders

If you want to know who really controls Zbit Semiconductor, Inc. (SHSE:688416), then you'll have to look at the makeup of its share registry. With 31% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors would appreciate the 15% increase in share price last week, given their one-year losses have totalled a disappointing 42%.

In the chart below, we zoom in on the different ownership groups of Zbit Semiconductor.

Check out our latest analysis for Zbit Semiconductor

ownership-breakdown
SHSE:688416 Ownership Breakdown October 18th 2024

What Does The Institutional Ownership Tell Us About Zbit Semiconductor?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Zbit Semiconductor does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Zbit Semiconductor's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SHSE:688416 Earnings and Revenue Growth October 18th 2024

Zbit Semiconductor is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Xiangdong Lu with 13% of shares outstanding. The second and third largest shareholders are Yinan Lv and Hefei Henglian Enterprise Management Consulting Center (Limited Partnership), with an equal amount of shares to their name at 8.3%.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Zbit Semiconductor

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

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 Zbit Semiconductor, Inc.. It has a market capitalization of just CN¥2.7b, and insiders have CN¥775m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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.

Private Equity Ownership

With a stake of 5.7%, private equity firms could influence the Zbit Semiconductor board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

Our data indicates that Private Companies hold 9.7%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Zbit Semiconductor you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.