Fujian Fynex Textile Science & Technology Co., Ltd.'s (SHSE:600493) last week's 15% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Fujian Fynex Textile Science & Technology indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 42% ownership
• 34% of Fujian Fynex Textile Science & Technology is held by insiders

To get a sense of who is truly in control of Fujian Fynex Textile Science & Technology Co., Ltd. (SHSE:600493), it is important to understand the ownership structure of the business. With 58% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 34% came under pressure after market cap dropped to CN¥1.4b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Fujian Fynex Textile Science & Technology.

Check out our latest analysis for Fujian Fynex Textile Science & Technology

What Does The Institutional Ownership Tell Us About Fujian Fynex Textile Science & Technology?

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.

We can see that Fujian Fynex Textile Science & 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 Fujian Fynex Textile Science & Technology, (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 Fujian Fynex Textile Science & Technology. With a 13% stake, CEO Chengcheng Chen is the largest shareholder. For context, the second largest shareholder holds about 8.7% of the shares outstanding, followed by an ownership of 8.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Mingfeng Li is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. 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 Fujian Fynex Textile Science & Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Fujian Fynex Textile Science & Technology Co., Ltd.. Insiders own CN¥485m worth of shares in the CN¥1.4b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 58% of Fujian Fynex Textile Science & Technology. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Fujian Fynex Textile Science & Technology (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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.