Zhejiang Renzhi Co., Ltd.'s (SZSE:002629) largest shareholders are individual investors who were rewarded as market cap surged CN¥85m last week

Key Insights

• Significant control over Zhejiang Renzhi by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 12 shareholders own 50% of the company
• Insider ownership in Zhejiang Renzhi is 22%

To get a sense of who is truly in control of Zhejiang Renzhi Co., Ltd. (SZSE:002629), 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 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, individual investors benefitted the most after the company's market cap rose by CN¥85m last week.

In the chart below, we zoom in on the different ownership groups of Zhejiang Renzhi.

See our latest analysis for Zhejiang Renzhi

What Does The Institutional Ownership Tell Us About Zhejiang Renzhi?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Zhejiang Renzhi already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Renzhi's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Zhejiang Renzhi. Our data shows that Zehong Chen is the largest shareholder with 19% of shares outstanding. With 19% and 4.3% of the shares outstanding respectively, Tibet Hanli Electronic Technology Partnership Enterprise (Limited Partnership) and Nantong Daosen Drilling And Production Equipment Co., Ltd. are the second and third largest shareholders. In addition, we found that Xi Chen, the CEO has 0.9% of the shares allocated to their name.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Renzhi

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own a reasonable proportion of Zhejiang Renzhi Co., Ltd.. Insiders have a CN¥184m stake in this CN¥819m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 46% stake in Zhejiang Renzhi. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 24%, of the company's shares. 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:

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. Take risks for example - Zhejiang Renzhi has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.