Retail investors among Vatti Corporation Limited's (SZSE:002035) largest stockholders and were hit after last week's 5.5% price drop

Key Insights

• The considerable ownership by retail investors in Vatti indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 48% of the company
• Insider ownership in Vatti is 15%

To get a sense of who is truly in control of Vatti Corporation Limited (SZSE:002035), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥6.5b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Vatti, beginning with the chart below.

View our latest analysis for Vatti

What Does The Institutional Ownership Tell Us About Vatti?

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.

As you can see, institutional investors have a fair amount of stake in Vatti. 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. 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 Vatti, (below). Of course, keep in mind that there are other factors to consider, too.

Vatti is not owned by hedge funds. Our data shows that Zhongshan FenJin Investment Co., Ltd. is the largest shareholder with 14% of shares outstanding. Ye Jiang Pan is the second largest shareholder owning 10% of common stock, and AXA SPDB Investment Managers Co., Ltd. holds about 4.1% of the company stock. Ye Jiang Pan, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Vatti

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems insiders own a significant proportion of Vatti Corporation Limited. Insiders own CN¥971m worth of shares in the CN¥6.5b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of Vatti shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 18%, 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:

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 1 warning sign with Vatti , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.