The recent 13% gain must have brightened CEO Zhen Biao Chen's week, Petpal Pet Nutrition Technology Co., Ltd.'s (SZSE:300673) most bullish insider

Key Insights

• Petpal Pet Nutrition Technology's significant insider ownership suggests inherent interests in company's expansion
• 51% of the business is held by the top 6 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Every investor in Petpal Pet Nutrition Technology Co., Ltd. (SZSE:300673) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 47% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥373m last week.

In the chart below, we zoom in on the different ownership groups of Petpal Pet Nutrition Technology.

View our latest analysis for Petpal Pet Nutrition Technology

What Does The Institutional Ownership Tell Us About Petpal Pet Nutrition Technology?

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.

As you can see, institutional investors have a fair amount of stake in Petpal Pet Nutrition Technology. 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 Petpal Pet Nutrition Technology's earnings history below. Of course, the future is what really matters.

Petpal Pet Nutrition Technology is not owned by hedge funds. With a 32% stake, CEO Zhen Biao Chen is the largest shareholder. In comparison, the second and third largest shareholders hold about 10% and 3.3% of the stock. Interestingly, the third-largest shareholder, Xiang Lan Zheng is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Petpal Pet Nutrition Technology

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.

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 Petpal Pet Nutrition Technology Co., Ltd.. Insiders own CN¥1.5b worth of shares in the CN¥3.2b company. 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 43% stake in Petpal Pet Nutrition Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.