Daodaoquan Grain and Oil Co.,Ltd. (SZSE:002852) CEO Jian Jun Liu's holdings dropped 13% in value as a result of the recent pullback

Key Insights

• Daodaoquan Grain and OilLtd's significant insider ownership suggests inherent interests in company's expansion
• 50% of the business is held by the top 5 shareholders
• 16% of Daodaoquan Grain and OilLtd is held by Institutions

If you want to know who really controls Daodaoquan Grain and Oil Co.,Ltd. (SZSE:002852), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders 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).

As market cap fell to CN¥2.5b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Daodaoquan Grain and OilLtd.

View our latest analysis for Daodaoquan Grain and OilLtd

What Does The Institutional Ownership Tell Us About Daodaoquan Grain and OilLtd?

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.

We can see that Daodaoquan Grain and OilLtd does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Daodaoquan Grain and OilLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Daodaoquan Grain and OilLtd is not owned by hedge funds. The company's CEO Jian Jun Liu is the largest shareholder with 39% of shares outstanding. Guangdong Hengkuo Investment Management Co., Ltd. is the second largest shareholder owning 4.1% of common stock, and China Post & Capital Fund Management Co., Ltd. holds about 2.8% of the company stock.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Daodaoquan Grain and OilLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders maintain a significant holding in Daodaoquan Grain and Oil Co.,Ltd.. It has a market capitalization of just CN¥2.5b, and insiders have CN¥1.1b worth of shares in their own names. 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

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Daodaoquan Grain and OilLtd. 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.

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. For example, we've discovered 4 warning signs for Daodaoquan Grain and OilLtd (1 shouldn't be ignored!) 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.