NanJing AoLian AE&EA Co.,Ltd's (SZSE:300585) stock price dropped 10% last week; retail investors would not be happy

Key Insights

• The considerable ownership by retail investors in NanJing AoLian AE&EALtd indicates that they collectively have a greater say in management and business strategy
• The top 18 shareholders own 47% of the company
• Insider ownership in NanJing AoLian AE&EALtd is 11%

If you want to know who really controls NanJing AoLian AE&EA Co.,Ltd (SZSE:300585), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, retail investors endured the biggest losses as the stock fell by 10%.

Let's delve deeper into each type of owner of NanJing AoLian AE&EALtd, beginning with the chart below.

Check out our latest analysis for NanJing AoLian AE&EALtd

What Does The Institutional Ownership Tell Us About NanJing AoLian AE&EALtd?

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 NanJing AoLian AE&EALtd. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 NanJing AoLian AE&EALtd'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 NanJing AoLian AE&EALtd. Looking at our data, we can see that the largest shareholder is Guangxi Ruiying Asset Management Co., Ltd. with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 0.8%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 18 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 NanJing AoLian AE&EALtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 insiders own a significant proportion of NanJing AoLian AE&EA Co.,Ltd. Insiders have a CN¥271m stake in this CN¥2.5b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 53% of NanJing AoLian AE&EALtd. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 30%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for NanJing AoLian AE&EALtd that you should be aware of before investing here.

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.

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

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.