Zhejiang Dafeng Industry Co., Ltd (SHSE:603081) surges 8.6%; individual investors who own 53% shares profited along with insiders

Key Insights

• Zhejiang Dafeng Industry's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 25 investors have a majority stake in the company with 47% ownership
• Insider ownership in Zhejiang Dafeng Industry is 39%

To get a sense of who is truly in control of Zhejiang Dafeng Industry Co., Ltd (SHSE:603081), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 8.6% increase in the stock price last week, individual investors profited the most, but insiders who own 39% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Zhejiang Dafeng Industry.

Check out our latest analysis for Zhejiang Dafeng Industry

What Does The Institutional Ownership Tell Us About Zhejiang Dafeng Industry?

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.

Institutions have a very small stake in Zhejiang Dafeng Industry. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Zhejiang Dafeng Industry. With a 24% stake, CEO Hua Feng is the largest shareholder. For context, the second largest shareholder holds about 8.6% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang Dafeng Industry

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our most recent data indicates that insiders own a reasonable proportion of Zhejiang Dafeng Industry Co., Ltd. It has a market capitalization of just CN¥6.2b, and insiders have CN¥2.5b 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

The general public, who are usually individual investors, hold a substantial 53% stake in Zhejiang Dafeng Industry, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 4.1%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Dafeng Industry better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Zhejiang Dafeng Industry (at least 2 which are significant) , and understanding them should be part of your investment process.

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.