Individual investors invested in Beijing Fourth Paradigm Technology Co., Ltd. (HKG:6682) copped the brunt of last week's HK$1.4b market cap decline

Key Insights

• Significant control over Beijing Fourth Paradigm Technology by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 10 shareholders
• 22% of Beijing Fourth Paradigm Technology is held by insiders

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If you want to know who really controls Beijing Fourth Paradigm Technology Co., Ltd. (HKG:6682), 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 48% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 22% came under pressure after market cap dropped to HK$21b last week,individual investors took the most losses.

Let's delve deeper into each type of owner of Beijing Fourth Paradigm Technology, beginning with the chart below.

Check out our latest analysis for Beijing Fourth Paradigm Technology

What Does The Institutional Ownership Tell Us About Beijing Fourth Paradigm Technology?

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.

As you can see, institutional investors have a fair amount of stake in Beijing Fourth Paradigm Technology. 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 Beijing Fourth Paradigm Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Beijing Fourth Paradigm Technology. With a 22% stake, CEO Wenyuan Dai is the largest shareholder. In comparison, the second and third largest shareholders hold about 14% and 2.7% of the stock.

We did some more digging and found that 10 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 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 Beijing Fourth Paradigm Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

It seems insiders own a significant proportion of Beijing Fourth Paradigm Technology Co., Ltd.. It has a market capitalization of just HK$21b, and insiders have HK$4.6b worth of shares in their own names. That's quite significant. 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

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Beijing Fourth Paradigm Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Beijing Fourth Paradigm Technology better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.