State or government invested in Zhengyuan Geomatics Group Co.,Ltd. (SHSE:688509) copped the brunt of last week's CN¥462m market cap decline

Key Insights

• Zhengyuan Geomatics GroupLtd's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the company is held by a single shareholder (China Metallurgical Geology Bureau)
• Institutional ownership in Zhengyuan Geomatics GroupLtd is 12%

Every investor in Zhengyuan Geomatics Group Co.,Ltd. (SHSE:688509) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 50% to be precise, is state or government. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 13% decline in share price, state or government suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Zhengyuan Geomatics GroupLtd.

See our latest analysis for Zhengyuan Geomatics GroupLtd

What Does The Institutional Ownership Tell Us About Zhengyuan Geomatics GroupLtd?

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.

Zhengyuan Geomatics GroupLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Zhengyuan Geomatics GroupLtd'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 Zhengyuan Geomatics GroupLtd. The company's largest shareholder is China Metallurgical Geology Bureau, with ownership of 50%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. In comparison, the second and third largest shareholders hold about 3.4% and 3.3% of the stock.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhengyuan Geomatics GroupLtd

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. 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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 5.0%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. To that end, you should be aware of the 1 warning sign we've spotted with Zhengyuan Geomatics GroupLtd .

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.