Shanghai Huaming Intelligent Terminal Equipment Co., Ltd.'s (SZSE:300462) stock price dropped 12% last week; retail investors would not be happy

Key Insights

• Significant control over Shanghai Huaming Intelligent Terminal Equipment by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 19 shareholders own 44% of the company
• Insider ownership in Shanghai Huaming Intelligent Terminal Equipment is 38%

To get a sense of who is truly in control of Shanghai Huaming Intelligent Terminal Equipment Co., Ltd. (SZSE:300462), it is important to understand the ownership structure of the business. With 56% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 12% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 38% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Shanghai Huaming Intelligent Terminal Equipment.

View our latest analysis for Shanghai Huaming Intelligent Terminal Equipment

What Does The Institutional Ownership Tell Us About Shanghai Huaming Intelligent Terminal Equipment?

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 Shanghai Huaming Intelligent Terminal Equipment does have institutional investors; and they hold a good portion of the company's stock. 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 Shanghai Huaming Intelligent Terminal Equipment's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shanghai Huaming Intelligent Terminal Equipment. With a 29% stake, CEO Liang Zhang is the largest shareholder. For context, the second largest shareholder holds about 2.3% of the shares outstanding, followed by an ownership of 2.2% by the third-largest shareholder.

A deeper look at our ownership data shows that the top 19 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shanghai Huaming Intelligent Terminal Equipment

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.

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 Shanghai Huaming Intelligent Terminal Equipment Co., Ltd.. Insiders own CN¥630m worth of shares in the CN¥1.7b company. 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, who are usually individual investors, hold a substantial 56% stake in Shanghai Huaming Intelligent Terminal Equipment, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Shanghai Huaming Intelligent Terminal Equipment has 1 warning sign we think you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.