Private companies in Shanghai Zhezhong Group Co.,Ltd (SZSE:002346) are its biggest bettors, and their bets paid off as stock gained 21% last week

Key Insights

• The considerable ownership by private companies in Shanghai Zhezhong GroupLtd indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 57% of the company
• 23% of Shanghai Zhezhong GroupLtd is held by insiders

If you want to know who really controls Shanghai Zhezhong Group Co.,Ltd (SZSE:002346), then you'll have to look at the makeup of its share registry. With 43% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies were the biggest beneficiaries of last week’s 21% gain.

Let's delve deeper into each type of owner of Shanghai Zhezhong GroupLtd, beginning with the chart below.

Check out our latest analysis for Shanghai Zhezhong GroupLtd

What Does The Lack Of Institutional Ownership Tell Us About Shanghai Zhezhong GroupLtd?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Shanghai Zhezhong GroupLtd's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Shanghai Zhezhong GroupLtd. The company's largest shareholder is Shanghai Kangfeng Investment Management Co., Ltd., with ownership of 43%. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 57% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shanghai Zhezhong GroupLtd

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Shanghai Zhezhong Group Co.,Ltd. It has a market capitalization of just CN¥5.2b, and insiders have CN¥1.2b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shanghai Zhezhong GroupLtd. 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

It seems that Private Companies own 43%, of the Shanghai Zhezhong GroupLtd stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. For instance, we've identified 1 warning sign for Shanghai Zhezhong GroupLtd that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.