Individual investors invested in Zhejiang Bangjie Holding Group Co.,Ltd (SZSE:002634) up 12% last week, insiders too were rewarded

Key Insights

• The considerable ownership by individual investors in Zhejiang Bangjie Holding GroupLtd indicates that they collectively have a greater say in management and business strategy
• A total of 22 investors have a majority stake in the company with 49% ownership
• Insiders own 26% of Zhejiang Bangjie Holding GroupLtd

To get a sense of who is truly in control of Zhejiang Bangjie Holding Group Co.,Ltd (SZSE:002634), it is important to understand the ownership structure of the business. With 51% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that reaped the most benefits after last week’s 12% price gain, insiders also received a 26% cut.

In the chart below, we zoom in on the different ownership groups of Zhejiang Bangjie Holding GroupLtd.

Check out our latest analysis for Zhejiang Bangjie Holding GroupLtd

What Does The Institutional Ownership Tell Us About Zhejiang Bangjie Holding GroupLtd?

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 Zhejiang Bangjie Holding GroupLtd 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. 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 Bangjie Holding GroupLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhejiang Bangjie Holding GroupLtd. Looking at our data, we can see that the largest shareholder is Jianwei Tao with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.6% and 6.4% of the stock.

Our studies suggest that the top 22 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 Zhejiang Bangjie Holding GroupLtd

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Zhejiang Bangjie Holding Group Co.,Ltd. It has a market capitalization of just CN¥1.7b, and insiders have CN¥427m worth of shares in their own names. 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, mostly comprising of individual investors, collectively holds 51% of Zhejiang Bangjie Holding GroupLtd 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 Equity Ownership

Private equity firms hold a 6.4% stake in Zhejiang Bangjie Holding GroupLtd. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 7.6%, of the shares on issue. 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 Zhejiang Bangjie Holding GroupLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Zhejiang Bangjie Holding GroupLtd (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.