Shandong Kuntai New Material Technology Co., Ltd.'s (SZSE:001260) largest shareholder, Top Key Executive Ming Zhang sees holdings value fall by 11% following recent drop

Key Insights

• Significant insider control over Shandong Kuntai New Material Technology implies vested interests in company growth
• The top 2 shareholders own 67% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Shandong Kuntai New Material Technology Co., Ltd. (SZSE:001260), then you'll have to look at the makeup of its share registry. With 67% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 11%.

Let's take a closer look to see what the different types of shareholders can tell us about Shandong Kuntai New Material Technology.

See our latest analysis for Shandong Kuntai New Material Technology

What Does The Institutional Ownership Tell Us About Shandong Kuntai New Material 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.

Shandong Kuntai New Material Technology 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. 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 Shandong Kuntai New Material Technology's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Shandong Kuntai New Material Technology. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Shandong Kuntai New Material Technology's case, its Top Key Executive, Ming Zhang, is the largest shareholder, holding 50% of shares outstanding. Feng Li is the second largest shareholder owning 17% of common stock, and Ningbo Meishan Bonded Port Area Kuncheng Investment Management Partnership Enterprise (L.P) holds about 5.9% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 67% stake.

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 Shandong Kuntai New Material Technology

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the Shandong Kuntai New Material Technology Co., Ltd. stock. This gives them a lot of power. So they have a CN¥1.1b stake in this CN¥1.7b business. Most would argue this is a positive, showing strong alignment with shareholders. 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 22% stake in Shandong Kuntai New Material Technology. 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 5.9%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shandong Kuntai New Material Technology better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Shandong Kuntai New Material Technology (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.