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Owning 35% in SG Micro Corp (SZSE:300661) Means That Insiders Are Heavily Invested in the Company's Future

Simply Wall St ·  09/11 10:05

To get a sense of who is truly in control of SG Micro Corp (SZSE:300661), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

So, insiders of SG Micro have a lot at stake and every decision they make on the company's future is important to them from a financial point of view.

Let's take a closer look to see what the different types of shareholders can tell us about SG Micro.

Check out our latest analysis for SG Micro

ownership-breakdownSZSE:300661 Ownership Breakdown September 11th 2022

What Does The Institutional Ownership Tell Us About SG Micro?

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.

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

earnings-and-revenue-growthSZSE:300661 Earnings and Revenue Growth September 11th 2022

SG Micro is not owned by hedge funds. The company's CEO Shilong Zhang is the largest shareholder with 20% of shares outstanding. Shanghai Shanyu Enterprise Management Consulting Co., Ltd. is the second largest shareholder owning 8.7% of common stock, and Qin Zhang holds about 8.6% of the company stock. Interestingly, the third-largest shareholder, Qin Zhang is also a Vice Chairman, again, indicating strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of SG Micro

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 maintain a significant holding in SG Micro Corp. Insiders own CN¥19b worth of shares in the CN¥55b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in SG Micro. 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 Company Ownership

We can see that Private Companies own 14%, 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:

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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

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