Baotou INST Magnetic New Materials Co., Ltd.'s (SZSE:301622) market cap rose CN¥970m last week; retail investors who hold 42% profited and so did insiders

Key Insights

• The considerable ownership by retail investors in Baotou INST Magnetic New Materials indicates that they collectively have a greater say in management and business strategy
• 52% of the business is held by the top 6 shareholders
• 42% of Baotou INST Magnetic New Materials is held by insiders

To get a sense of who is truly in control of Baotou INST Magnetic New Materials Co., Ltd. (SZSE:301622), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 12% increase in the stock price last week, retail investors profited the most, but insiders who own 42% stock also stood to gain from the increase.

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

View our latest analysis for Baotou INST Magnetic New Materials

What Does The Institutional Ownership Tell Us About Baotou INST Magnetic New Materials?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Less than 5% of Baotou INST Magnetic New Materials is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in Baotou INST Magnetic New Materials. The company's CEO Baoping Zhou is the largest shareholder with 15% of shares outstanding. With 12% and 9.1% of the shares outstanding respectively, Weimin Fei and Shichang Wang are the second and third largest shareholders. Interestingly, the third-largest shareholder, Shichang Wang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 Baotou INST Magnetic 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 insiders own a significant proportion of Baotou INST Magnetic New Materials Co., Ltd.. It has a market capitalization of just CN¥9.3b, and insiders have CN¥3.9b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 42% stake in Baotou INST Magnetic New Materials. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 13%, of the Baotou INST Magnetic New Materials stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Baotou INST Magnetic New Materials (of which 1 can't be ignored!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.