Zhejiang Wanfeng Auto Wheel Co., Ltd.'s (SZSE:002085) market cap dropped CN¥1.8b last week; Retail investors bore the brunt

Key Insights

• The considerable ownership by retail investors in Zhejiang Wanfeng Auto Wheel indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 51% of the company
• Institutions own 16% of Zhejiang Wanfeng Auto Wheel

To get a sense of who is truly in control of Zhejiang Wanfeng Auto Wheel Co., Ltd. (SZSE:002085), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥1.8b.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Wanfeng Auto Wheel.

View our latest analysis for Zhejiang Wanfeng Auto Wheel

What Does The Institutional Ownership Tell Us About Zhejiang Wanfeng Auto Wheel?

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.

Zhejiang Wanfeng Auto Wheel already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Zhejiang Wanfeng Auto Wheel's earnings history below. Of course, the future is what really matters.

Zhejiang Wanfeng Auto Wheel is not owned by hedge funds. The company's largest shareholder is Wanfeng Auto Holding Group Co.,Ltd, with ownership of 35%. With 9.1% and 4.7% of the shares outstanding respectively, Aeon Life Insurance Co. Ltd., Asset Management Arm and Ailian Chen are the second and third largest shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Zhejiang Wanfeng Auto Wheel

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.

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.

Our most recent data indicates that insiders own some shares in Zhejiang Wanfeng Auto Wheel Co., Ltd.. The insiders have a meaningful stake worth CN¥1.3b. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Wanfeng Auto Wheel. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 35%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 instance, we've identified 3 warning signs for Zhejiang Wanfeng Auto Wheel (1 makes us a bit uncomfortable) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com