The recent CN¥228m market cap decrease is likely to have disappointed insiders invested in Dongzhu Ecological Environment Protection Co., Ltd. (SHSE:603359)

Key Insights

• Dongzhu Ecological Environment Protection's significant insider ownership suggests inherent interests in company's expansion
• A total of 5 investors have a majority stake in the company with 50% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Dongzhu Ecological Environment Protection Co., Ltd. (SHSE:603359) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 12% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Dongzhu Ecological Environment Protection.

Check out our latest analysis for Dongzhu Ecological Environment Protection

What Does The Institutional Ownership Tell Us About Dongzhu Ecological Environment Protection?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Dongzhu Ecological Environment Protection already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Dongzhu Ecological Environment Protection's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Dongzhu Ecological Environment Protection. Huiming Xi is currently the largest shareholder, with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.5% and 3.5%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Dongzhu Ecological Environment Protection

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Dongzhu Ecological Environment Protection Co., Ltd.. Insiders own CN¥826m worth of shares in the CN¥1.7b company. 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-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Dongzhu Ecological Environment Protection 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.