The recent pullback must have dismayed Guangdong Feinan Resources Recycling Co., Ltd (SZSE:301500) insiders who own 72% of the company

Key Insights

• Significant insider control over Guangdong Feinan Resources Recycling implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 72% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Guangdong Feinan Resources Recycling Co., Ltd (SZSE:301500), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 72% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 8.3% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Guangdong Feinan Resources Recycling.

Check out our latest analysis for Guangdong Feinan Resources Recycling

What Does The Lack Of Institutional Ownership Tell Us About Guangdong Feinan Resources Recycling?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Guangdong Feinan Resources Recycling might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Guangdong Feinan Resources Recycling. Looking at our data, we can see that the largest shareholder is Xuejuan He with 36% of shares outstanding. Yanjun Sun is the second largest shareholder owning 36% of common stock, and Beijing Guosheng Asset Management Co., Ltd. holds about 5.8% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Guangdong Feinan Resources Recycling

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.

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 the majority of Guangdong Feinan Resources Recycling Co., Ltd. This means they can collectively make decisions for the company. That means they own CN¥4.8b worth of shares in the CN¥6.7b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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 Equity Ownership

Private equity firms hold a 5.8% stake in Guangdong Feinan Resources Recycling. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 3.4%, of the Guangdong Feinan Resources Recycling stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangdong Feinan Resources Recycling better, we need to consider many other factors. Be aware that Guangdong Feinan Resources Recycling is showing 5 warning signs in our investment analysis , and 3 of those are concerning...

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.

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