Tayho Advanced Materials Group Co., Ltd.'s (SZSE:002254) market cap dropped CN¥446m last week; Individual investors bore the brunt

Key Insights

• Significant control over Tayho Advanced Materials Group by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 16 shareholders own 50% of the company
• Institutional ownership in Tayho Advanced Materials Group is 18%

A look at the shareholders of Tayho Advanced Materials Group Co., Ltd. (SZSE:002254) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 45% ownership. 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 6.3% decline in share price, individual investors suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Tayho Advanced Materials Group.

Check out our latest analysis for Tayho Advanced Materials Group

What Does The Institutional Ownership Tell Us About Tayho Advanced Materials Group?

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 Tayho Advanced Materials Group 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Tayho Advanced Materials Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Tayho Advanced Materials Group. Looking at our data, we can see that the largest shareholder is Yantai Guofeng Investment Holdings Groups Co.,Ltd with 20% of shares outstanding. Yantai Yufeng Investment Co., Ltd. is the second largest shareholder owning 14% of common stock, and National Council for Social Security Fund holds about 4.9% of the company stock.

After doing some more digging, we found that the top 16 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Tayho Advanced Materials Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data suggests that insiders own under 1% of Tayho Advanced Materials Group Co., Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than CN¥32m worth of shares in the CN¥6.7b company. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 45% 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.

Private Company Ownership

Our data indicates that Private Companies hold 36%, 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Tayho Advanced Materials Group (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

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.

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