XTC New Energy Materials(Xiamen) Co.,Ltd.'s (SHSE:688778) last week's 8.4% decline must have disappointed public companies who have a significant stake

Key Insights

• Significant control over XTC New Energy Materials(Xiamen)Ltd by public companies implies that the general public has more power to influence management and governance-related decisions
• Xiamen Tungsten Co.,Ltd. owns 50% of the company
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of XTC New Energy Materials(Xiamen) Co.,Ltd. (SHSE:688778) can tell us which group is most powerful. The group holding the most number of shares in the company, around 55% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 8.4% decline in share price, public companies suffered the most losses.

Let's delve deeper into each type of owner of XTC New Energy Materials(Xiamen)Ltd, beginning with the chart below.

View our latest analysis for XTC New Energy Materials(Xiamen)Ltd

What Does The Institutional Ownership Tell Us About XTC New Energy Materials(Xiamen)Ltd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that XTC New Energy Materials(Xiamen)Ltd 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 XTC New Energy Materials(Xiamen)Ltd, (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 XTC New Energy Materials(Xiamen)Ltd. Xiamen Tungsten Co.,Ltd. is currently the largest shareholder, with 50% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Fujian Yekong Equity Investment Management Co., Ltd. is the second largest shareholder owning 8.0% of common stock, and Ningbo Haicheng Lingzun Venture Capital Partnership Enterprise (Limited Partnership) holds about 7.3% of the company stock.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of XTC New Energy Materials(Xiamen)Ltd

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.

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 18% stake in XTC New Energy Materials(Xiamen)Ltd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 8.0%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

Our data indicates that Private Companies hold 8.4%, 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.

Public Company Ownership

It appears to us that public companies own 55% of XTC New Energy Materials(Xiamen)Ltd. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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 instance, we've identified 2 warning signs for XTC New Energy Materials(Xiamen)Ltd 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.