New Hope Dairy Co., Ltd.'s (SZSE:002946) top holders are insiders and they are likely disappointed by the recent 4.1% drop

Key Insights

• New Hope Dairy's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Chang Liu with a 65% stake
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in New Hope Dairy Co., Ltd. (SZSE:002946) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 82% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders as a group endured the highest losses after market cap fell by CN¥381m.

In the chart below, we zoom in on the different ownership groups of New Hope Dairy.

Check out our latest analysis for New Hope Dairy

What Does The Institutional Ownership Tell Us About New Hope Dairy?

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.

Less than 5% of New Hope Dairy is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in New Hope Dairy. Chang Liu is currently the largest shareholder, with 65% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 16% and 1.4% of the shares outstanding respectively, Yonghao Liu and Gang Xi are the second and third largest shareholders. Gang Xi, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of New Hope Dairy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the New Hope Dairy Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥9.0b, that means insiders have a whopping CN¥7.4b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with New Hope Dairy .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.