Both individual investors who control a good portion of Shandong Xinchao Energy Corporation Limited (SHSE:600777) along with institutions must be dismayed after last week's 6.3% decrease

Key Insights

• Significant control over Shandong Xinchao Energy by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 49% of the company
• 24% of Shandong Xinchao Energy is held by Institutions

To get a sense of who is truly in control of Shandong Xinchao Energy Corporation Limited (SHSE:600777), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 51% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 6.3% price drop, institutions with their 24% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Shandong Xinchao Energy.

View our latest analysis for Shandong Xinchao Energy

What Does The Institutional Ownership Tell Us About Shandong Xinchao Energy?

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.

Shandong Xinchao Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Shandong Xinchao Energy's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shandong Xinchao Energy. Looking at our data, we can see that the largest shareholder is Shenzhen Mingzheng Shunda Investment Management Co., Ltd. with 6.4% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.5% and 5.0% of the stock.

Our studies suggest that the top 25 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 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shandong Xinchao Energy

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Shandong Xinchao Energy Corporation Limited in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥28k worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of Shandong Xinchao Energy 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 Shandong Xinchao Energy. 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

It seems that Private Companies own 16%, of the Shandong Xinchao Energy stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Shandong Xinchao Energy has 1 warning sign we think you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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