ADD Industry (Zhejiang) CO., LTD (SHSE:603089) institutional owners may be pleased with recent gains after 19% loss over the past year

Key Insights

• Significantly high institutional ownership implies ADD Industry (Zhejiang)'s stock price is sensitive to their trading actions
• 51% of the business is held by the top 2 shareholders
• 21% of ADD Industry (Zhejiang) is held by insiders

Every investor in ADD Industry (Zhejiang) CO., LTD (SHSE:603089) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors would probably welcome last week's 11% increase in the share price after a year of 19% losses as a sign that returns may to begin trending higher.

In the chart below, we zoom in on the different ownership groups of ADD Industry (Zhejiang).

Check out our latest analysis for ADD Industry (Zhejiang)

What Does The Institutional Ownership Tell Us About ADD Industry (Zhejiang)?

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 ADD Industry (Zhejiang) 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. 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 ADD Industry (Zhejiang)'s historic earnings and revenue below, but keep in mind there's always more to the story.

ADD Industry (Zhejiang) is not owned by hedge funds. The company's largest shareholder is Zhejiang Zhengyu Investment Management Co., Ltd., with ownership of 44%. Meanwhile, the second and third largest shareholders, hold 7.4% and 6.9%, of the shares outstanding, respectively. Lian Ping Zheng, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. In addition, we found that Nian Hui Zheng, the CEO has 6.9% of the shares allocated to their name.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of ADD Industry (Zhejiang)

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.

Our most recent data indicates that insiders own a reasonable proportion of ADD Industry (Zhejiang) CO., LTD. Insiders have a CN¥380m stake in this CN¥1.8b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in ADD Industry (Zhejiang). 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:

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. For example, we've discovered 4 warning signs for ADD Industry (Zhejiang) (1 shouldn't be ignored!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.