Zhejiang Weiming Environment Protection Co., Ltd.'s (SHSE:603568) stock price dropped 4.9% last week; private companies would not be happy

Key Insights

• Significant control over Zhejiang Weiming Environment Protection by private companies implies that the general public has more power to influence management and governance-related decisions
• 58% of the business is held by the top 2 shareholders
• 24% of Zhejiang Weiming Environment Protection is held by insiders

Every investor in Zhejiang Weiming Environment Protection Co., Ltd. (SHSE:603568) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 48% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 4.9% decrease in the stock price last week, private companies suffered the most losses, but insiders who own 24% stock also took a hit.

Let's delve deeper into each type of owner of Zhejiang Weiming Environment Protection, beginning with the chart below.

See our latest analysis for Zhejiang Weiming Environment Protection

What Does The Institutional Ownership Tell Us About Zhejiang Weiming Environment Protection?

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.

Zhejiang Weiming Environment Protection 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Zhejiang Weiming Environment Protection, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Zhejiang Weiming Environment Protection. Looking at our data, we can see that the largest shareholder is Weiming Group Co., Ltd. with 48% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 3.2% of the stock. Guang Ming Xiang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 58% stake.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Zhejiang Weiming Environment Protection

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our most recent data indicates that insiders own a reasonable proportion of Zhejiang Weiming Environment Protection Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥8.6b stake in this CN¥36b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Zhejiang Weiming Environment Protection. 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

We can see that Private Companies own 48%, of the shares on issue. 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:

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 Weiming Environment Protection , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.