Zhejiang Chinastars New Materials Group Co., Ltd.'s (SZSE:301077) most bullish insider, CEO Shijie Wang must be pleased with the recent 14% gain

Key Insights

• Zhejiang Chinastars New Materials Group's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 57% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Zhejiang Chinastars New Materials Group Co., Ltd. (SZSE:301077) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 14% gain.

In the chart below, we zoom in on the different ownership groups of Zhejiang Chinastars New Materials Group.

View our latest analysis for Zhejiang Chinastars New Materials Group

What Does The Lack Of Institutional Ownership Tell Us About Zhejiang Chinastars New Materials Group?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Zhejiang Chinastars New Materials Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Zhejiang Chinastars New Materials Group is not owned by hedge funds. The company's CEO Shijie Wang is the largest shareholder with 47% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.3% and 7.5% of the stock.

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.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang Chinastars New Materials Group

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.

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.

It seems that insiders own more than half the Zhejiang Chinastars New Materials Group Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥3.5b, that means they have CN¥2.0b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Chinastars New Materials Group. 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

We can see that Private Companies own 7.5%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Chinastars New Materials Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for Zhejiang Chinastars New Materials Group (1 is a bit unpleasant!) that you should be aware of before investing here.

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.