Zhejiang Dun'an Artificial Environment Co., Ltd's (SZSE:002011) last week's 7.0% decline must have disappointed public companies who have a significant stake

Key Insights

• Zhejiang Dun'an Artificial Environment's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 50% of the company
• Institutions own 18% of Zhejiang Dun'an Artificial Environment

A look at the shareholders of Zhejiang Dun'an Artificial Environment Co., Ltd (SZSE:002011) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are public companies with 47% ownership. 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 as a group endured the highest losses last week after market cap fell by CN¥831m.

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

View 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.

Zhejiang Dun'an Artificial Environment already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhejiang Dun'an Artificial Environment's historic earnings and revenue below, but keep in mind there's always more to the story.

Zhejiang Dun'an Artificial Environment is not owned by hedge funds. Gree Electric Appliances, Inc. of Zhuhai is currently the largest shareholder, with 38% of shares outstanding. For context, the second largest shareholder holds about 8.4% of the shares outstanding, followed by an ownership of 3.4% by the third-largest shareholder.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Zhejiang Dun'an Artificial Environment

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.

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¥26m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 35% stake in Zhejiang Dun'an Artificial Environment. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

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.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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