Jiangsu Guomao Reducer Co., Ltd.'s (SHSE:603915) stock price dropped 9.9% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in Jiangsu Guomao Reducer indicates that they collectively have a greater say in management and business strategy
• 51% of the company is held by a single shareholder (Guomao Reducer Group Co., Ltd.)
• Insiders own 17% of Jiangsu Guomao Reducer

Every investor in Jiangsu Guomao Reducer Co., Ltd. (SHSE:603915) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, private companies endured the biggest losses as the stock fell by 9.9%.

Let's delve deeper into each type of owner of Jiangsu Guomao Reducer, beginning with the chart below.

Check out our latest analysis for Jiangsu Guomao Reducer

What Does The Institutional Ownership Tell Us About Jiangsu Guomao Reducer?

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.

Jiangsu Guomao Reducer 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. 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 Jiangsu Guomao Reducer, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Jiangsu Guomao Reducer. The company's largest shareholder is Guomao Reducer Group Co., Ltd., with ownership of 51%. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 8.5% and 7.9% of the stock. Bin Xu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Jiangsu Guomao Reducer

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 most recent data indicates that insiders own a reasonable proportion of Jiangsu Guomao Reducer Co., Ltd.. Insiders own CN¥1.3b worth of shares in the CN¥8.0b company. That's quite meaningful. 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

The general public, who are usually individual investors, hold a 22% stake in Jiangsu Guomao Reducer. 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.

Private Company Ownership

We can see that Private Companies own 51%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Jiangsu Guomao Reducer better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can find 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.