CEO Jianlin Yang, Wuxi JinYang New Materials Co., Ltd.'s (SZSE:301210) largest shareholder sees value of holdings go down 11% after recent drop

Key Insights

• Significant insider control over Wuxi JinYang New Materials implies vested interests in company growth
• 55% of the business is held by the top 2 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Wuxi JinYang New Materials Co., Ltd. (SZSE:301210), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 51% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 11% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Wuxi JinYang New Materials.

View our latest analysis for Wuxi JinYang New Materials

What Does The Institutional Ownership Tell Us About Wuxi JinYang New Materials?

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.

Wuxi JinYang New Materials 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 Wuxi JinYang New Materials' historic earnings and revenue below, but keep in mind there's always more to the story.

Wuxi JinYang New Materials is not owned by hedge funds. The company's CEO Jianlin Yang is the largest shareholder with 45% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 6.4% of the stock. Interestingly, the third-largest shareholder, Hao Yang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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 55% 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Wuxi JinYang New Materials

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.

It seems that insiders own more than half the Wuxi JinYang New Materials Co., Ltd. stock. This gives them a lot of power. So they have a CN¥1.2b stake in this CN¥2.3b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Wuxi JinYang New Materials. 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

Our data indicates that Private Companies hold 14%, of the company's shares. 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. Be aware that Wuxi JinYang New Materials is showing 3 warning signs in our investment analysis , you should know about...

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.