Insiders were the biggest winners as Zhejiang Rongtai Electric Material Co.,Ltd.'s (SHSE:603119) market cap grew by CN¥417m last week

Key Insights

• Zhejiang Rongtai Electric MaterialLtd's significant insider ownership suggests inherent interests in company's expansion
• 51% of the business is held by the top 5 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Zhejiang Rongtai Electric Material Co.,Ltd. (SHSE:603119) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week’s 5.1% gain.

Let's delve deeper into each type of owner of Zhejiang Rongtai Electric MaterialLtd, beginning with the chart below.

See our latest analysis for Zhejiang Rongtai Electric MaterialLtd

What Does The Institutional Ownership Tell Us About Zhejiang Rongtai Electric MaterialLtd?

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.

As you can see, institutional investors have a fair amount of stake in Zhejiang Rongtai Electric MaterialLtd. 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. 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 Zhejiang Rongtai Electric MaterialLtd'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 Zhejiang Rongtai Electric MaterialLtd. Tairong Ge is currently the largest shareholder, with 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.6% and 5.4%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Zhejiang Rongtai Electric MaterialLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Zhejiang Rongtai Electric Material Co.,Ltd.. It is very interesting to see that insiders have a meaningful CN¥3.9b stake in this CN¥8.6b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Rongtai Electric MaterialLtd. 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 Equity Ownership

With a stake of 5.4%, private equity firms could influence the Zhejiang Rongtai Electric MaterialLtd board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.