Zhejiang Walrus New Material Co., Ltd.'s (SZSE:003011) market cap rose CN¥139m last week; retail investors who hold 48% profited and so did insiders

Key Insights

• Significant control over Zhejiang Walrus New Material by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 10 shareholders own 50% of the company
• Insiders own 33% of Zhejiang Walrus New Material

To get a sense of who is truly in control of Zhejiang Walrus New Material Co., Ltd. (SZSE:003011), it is important to understand the ownership structure of the business. With 48% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that reaped the most benefits after last week’s 12% price gain, insiders also received a 33% cut.

In the chart below, we zoom in on the different ownership groups of Zhejiang Walrus New Material.

Check out our latest analysis for Zhejiang Walrus New Material

What Does The Institutional Ownership Tell Us About Zhejiang Walrus New Material?

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

Zhejiang Walrus New Material is not owned by hedge funds. The company's CEO Zhoulin Wang is the largest shareholder with 27% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 3.4% by the third-largest shareholder. Interestingly, the third-largest shareholder, Guoqiang Lu is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Zhejiang Walrus New Material

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Zhejiang Walrus New Material Co., Ltd.. Insiders have a CN¥425m stake in this CN¥1.3b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 48% stake in Zhejiang Walrus New Material. 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 a stake of 11%, private equity firms could influence the Zhejiang Walrus New Material board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Zhejiang Walrus New Material , and understanding them should be part of your investment process.

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.