The recent CN¥150m market cap decrease is likely to have disappointed insiders invested in ShenZhen GAD Environmental Technology Co., Ltd. (SZSE:300854)

Key Insights

• Significant insider control over ShenZhen GAD Environmental Technology implies vested interests in company growth
• 53% of the business is held by the top 5 shareholders
• 17% of ShenZhen GAD Environmental Technology is held by Institutions

A look at the shareholders of ShenZhen GAD Environmental Technology Co., Ltd. (SZSE:300854) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥1.2b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of ShenZhen GAD Environmental Technology.

Check out our latest analysis for ShenZhen GAD Environmental Technology

What Does The Institutional Ownership Tell Us About ShenZhen GAD Environmental Technology?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that ShenZhen GAD Environmental Technology does have institutional investors; and they hold a good portion of the company's stock. 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 ShenZhen GAD Environmental Technology, (below). Of course, keep in mind that there are other factors to consider, too.

ShenZhen GAD Environmental Technology is not owned by hedge funds. Fang Ge is currently the largest shareholder, with 23% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 11% of the stock. Qingsong Liu, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

On looking further, we found that 53% 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 ShenZhen GAD Environmental 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.

It seems that insiders own more than half the ShenZhen GAD Environmental Technology Co., Ltd. stock. This gives them a lot of power. So they have a CN¥607m stake in this CN¥1.2b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 31% stake in ShenZhen GAD Environmental Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Case in point: We've spotted 3 warning signs for ShenZhen GAD Environmental Technology you should be aware of, and 1 of them is potentially serious.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.