Institutional investors are ADD Industry (Zhejiang) CO., LTD's (SHSE:603089) biggest bettors and were rewarded after last week's CN¥219m market cap gain

Key Insights

• Significantly high institutional ownership implies ADD Industry (Zhejiang)'s stock price is sensitive to their trading actions
• A total of 2 investors have a majority stake in the company with 51% ownership
• 21% of ADD Industry (Zhejiang) is held by insiders

To get a sense of who is truly in control of ADD Industry (Zhejiang) CO., LTD (SHSE:603089), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, institutional investors ended up benefitting the most after the company hit CN¥2.4b in market cap. One-year return to shareholders is currently 20% and last week’s gain was the icing on the cake.

Let's delve deeper into each type of owner of ADD Industry (Zhejiang), beginning with the chart below.

View 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.

As you can see, institutional investors have a fair amount of stake in ADD Industry (Zhejiang). 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 ADD Industry (Zhejiang)'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 ADD Industry (Zhejiang). 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. Furthermore, CEO Nian Hui Zheng is the owner of 6.9% of the company's shares.

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. 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 ADD Industry (Zhejiang)

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. 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.

Our information suggests that insiders maintain a significant holding in ADD Industry (Zhejiang) CO., LTD. Insiders have a CN¥514m stake in this CN¥2.4b 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). 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand ADD Industry (Zhejiang) better, we need to consider many other factors. For example, we've discovered 3 warning signs for ADD Industry (Zhejiang) (2 are significant!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.