Public companies are Zhejiang Dun'an Artificial Environment Co., Ltd's (SZSE:002011) biggest owners and were rewarded after market cap rose by CN¥719m last week

Key Insights

• Significant control over Zhejiang Dun'an Artificial Environment by public companies implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 3 shareholders
• 16% of Zhejiang Dun'an Artificial Environment is held by Institutions

To get a sense of who is truly in control of Zhejiang Dun'an Artificial Environment Co., Ltd (SZSE:002011), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 47% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, public companies collectively scored the highest last week as the company hit CN¥11b market cap following a 6.6% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Zhejiang Dun'an Artificial Environment.

Check out our latest analysis for Zhejiang Dun'an Artificial Environment

What Does The Institutional Ownership Tell Us About Zhejiang Dun'an Artificial Environment?

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 Zhejiang Dun'an Artificial Environment does have institutional investors; and they hold a good portion of the company's stock. 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 Dun'an Artificial Environment's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhejiang Dun'an Artificial Environment. Gree Electric Appliances, Inc. of Zhuhai is currently the company's largest shareholder with 39% of shares outstanding. With 8.4% and 3.1% of the shares outstanding respectively, Zijin Mining Group Company Limited and China Universal Asset Management Company Ltd. are the second and third largest shareholders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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

Insider Ownership Of Zhejiang Dun'an Artificial Environment

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. 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 most recent data indicates that insiders own less than 1% of Zhejiang Dun'an Artificial Environment Co., Ltd. Keep in mind that it's a big company, and the insiders own CN¥27m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 36% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

We can see that public companies hold 47% of the Zhejiang Dun'an Artificial Environment shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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 like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.