Recent 6.1% pullback would hurt Zhejiang Taihua New Material Group Co., Ltd. (SHSE:603055) insiders

Key Insights

• Insiders appear to have a vested interest in Zhejiang Taihua New Material Group's growth, as seen by their sizeable ownership
• 55% of the business is held by the top 2 shareholders
• Institutional ownership in Zhejiang Taihua New Material Group is 18%

Every investor in Zhejiang Taihua New Material Group Co., Ltd. (SHSE:603055) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 70% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, insiders endured the biggest losses as the stock fell by 6.1%.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Taihua New Material Group.

View our latest analysis for Zhejiang Taihua New Material Group

What Does The Institutional Ownership Tell Us About Zhejiang Taihua New Material Group?

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 Zhejiang Taihua New Material Group does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Zhejiang Taihua New Material Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Zhejiang Taihua New Material Group is not owned by hedge funds. The company's largest shareholder is Xiu You Shi, with ownership of 30%. Qing Dao Shi is the second largest shareholder owning 25% of common stock, and Wei Feng Shen holds about 15% of the company stock. Wei Feng Shen, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Zhejiang Taihua New Material Group

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own the majority of Zhejiang Taihua New Material Group Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥9.5b, that means insiders have a whopping CN¥6.7b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public-- including retail investors -- own 11% 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.

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Zhejiang Taihua New Material Group (of which 2 are a bit concerning!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.