Nanjing Wondux Environmental Protection Technology Corp., Ltd.'s (SHSE:688178) market cap dropped CN¥140m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Nanjing Wondux Environmental Protection Technology indicates that they collectively have a greater say in management and business strategy
• The top 5 shareholders own 52% of the company
• 14% of Nanjing Wondux Environmental Protection Technology is held by insiders

A look at the shareholders of Nanjing Wondux Environmental Protection Technology Corp., Ltd. (SHSE:688178) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥140m.

Let's take a closer look to see what the different types of shareholders can tell us about Nanjing Wondux Environmental Protection Technology.

See our latest analysis for Nanjing Wondux Environmental Protection Technology

What Does The Institutional Ownership Tell Us About Nanjing Wondux Environmental Protection Technology?

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.

Nanjing Wondux Environmental Protection Technology 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. 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 Nanjing Wondux Environmental Protection Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Nanjing Wondux Environmental Protection Technology is not owned by hedge funds. Nanjing Wondux Investment Co., Ltd. is currently the company's largest shareholder with 29% of shares outstanding. For context, the second largest shareholder holds about 9.8% of the shares outstanding, followed by an ownership of 5.2% by the third-largest shareholder. Jun Liu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. 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 Nanjing Wondux Environmental Protection Technology

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Nanjing Wondux Environmental Protection Technology Corp., Ltd.. It has a market capitalization of just CN¥1.1b, and insiders have CN¥149m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Nanjing Wondux Environmental Protection Technology. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 39%, of the Nanjing Wondux Environmental Protection Technology stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Nanjing Wondux Environmental Protection Technology better, we need to consider many other factors. Take risks for example - Nanjing Wondux Environmental Protection Technology has 1 warning sign we think you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.