Private equity firms who have a significant stake must be disappointed along with institutions after Shenzhen Transsion Holdings Co., Ltd.’s (SHSE:688036) market cap dropped by CN¥4.5b

Key Insights

• Significant control over Shenzhen Transsion Holdings by private equity firms implies that the general public has more power to influence management and governance-related decisions
• Shenzhen Transsion Investment Co., Ltd. owns 51% of the company
• Institutions own 24% of Shenzhen Transsion Holdings

If you want to know who really controls Shenzhen Transsion Holdings Co., Ltd. (SHSE:688036), 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 51% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 24% shares weren’t spared from last week’s CN¥4.5b market cap drop, private equity firms as a group suffered the maximum losses

Let’s take a closer look to see what the different types of shareholders can tell us about Shenzhen Transsion Holdings.

Check out our latest analysis for Shenzhen Transsion Holdings

What Does The Institutional Ownership Tell Us About Shenzhen Transsion Holdings?

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.

Shenzhen Transsion Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Shenzhen Transsion Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Shenzhen Transsion Holdings is not owned by hedge funds. Shenzhen Transsion Investment Co., Ltd. is currently the company’s largest shareholder with 51% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. CITIC Securities Company Limited, Asset Management Arm is the second largest shareholder owning 6.3% of common stock, and Xinyu Chuan Jiali Enterprise Management Partnership Enterprise (Limited Partnership) holds about 5.5% of the company stock.

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 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 Transsion Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Shenzhen Transsion Holdings Co., Ltd. insiders own under 1% of the company. However, it’s possible that insiders might have an indirect interest through a more complex structure. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CN¥16m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shenzhen Transsion Holdings. 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

Private equity firms hold a 51% stake in Shenzhen Transsion Holdings. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 13%, of the Shenzhen Transsion Holdings stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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. For instance, we’ve identified 1 warning sign for Shenzhen Transsion Holdings that you should be aware of.

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.

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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.