Guizhou Chitianhua Co.,Ltd.'s (SHSE:600227) market cap dropped CN¥454m last week; Retail investors bore the brunt

Key Insights

• Guizhou ChitianhuaLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 15 investors have a majority stake in the company with 41% ownership
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Guizhou Chitianhua Co.,Ltd. (SHSE:600227), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 59% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 11% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Guizhou ChitianhuaLtd.

See our latest analysis for Guizhou ChitianhuaLtd

What Does The Institutional Ownership Tell Us About Guizhou ChitianhuaLtd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

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

Guizhou ChitianhuaLtd is not owned by hedge funds. Our data shows that Guizhou Yuyang Trade Co., Ltd. is the largest shareholder with 27% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.7% and 5.6% of the stock.

A deeper look at our ownership data shows that the top 15 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Guizhou ChitianhuaLtd

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 less than 1% of Guizhou Chitianhua Co.,Ltd.. But they may have an indirect interest through a corporate structure that we haven't picked up on. It appears that the board holds about CN¥27m worth of stock. This compares to a market capitalization of CN¥3.8b. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 59% of Guizhou ChitianhuaLtd shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

It seems that Private Companies own 32%, of the Guizhou ChitianhuaLtd stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Guizhou ChitianhuaLtd better, we need to consider many other factors. For instance, we've identified 1 warning sign for Guizhou ChitianhuaLtd that you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free 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.