Painful week for individual investors invested in Xinzhi Group Co., Ltd. (SZSE:002664) after 8.7% drop, institutions also suffered losses

Key Insights

• Xinzhi Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 4 shareholders
• 26% of Xinzhi Group is held by insiders

Every investor in Xinzhi Group Co., Ltd. (SZSE:002664) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 36% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 8.7% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 35% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Xinzhi Group.

View our latest analysis for Xinzhi Group

What Does The Institutional Ownership Tell Us About Xinzhi Group?

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 Xinzhi Group does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Xinzhi Group, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Xinzhi Group. CITIC Asset Management Corporation, Ltd is currently the largest shareholder, with 26% of shares outstanding. The second and third largest shareholders are Xiaoqing Ye and Xingman Yin, with an equal amount of shares to their name at 11%.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Xinzhi Group

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 information suggests that insiders maintain a significant holding in Xinzhi Group Co., Ltd.. Insiders have a CN¥1.5b stake in this CN¥6.0b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinzhi Group. 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 instance, we've identified 1 warning sign for Xinzhi Group that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.