Retail investors are Henan Zhongfu Industrial Co.,Ltd's (SHSE:600595) biggest owners and were hit after market cap dropped CN¥601m

Key Insights

• Significant control over Henan Zhongfu IndustrialLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 44% of the company
• Institutions own 15% of Henan Zhongfu IndustrialLtd

A look at the shareholders of Henan Zhongfu Industrial Co.,Ltd (SHSE:600595) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥601m.

Let's take a closer look to see what the different types of shareholders can tell us about Henan Zhongfu IndustrialLtd.

Check out our latest analysis for Henan Zhongfu IndustrialLtd

What Does The Institutional Ownership Tell Us About Henan Zhongfu IndustrialLtd?

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 Henan Zhongfu IndustrialLtd. 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. 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 Henan Zhongfu IndustrialLtd'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 Henan Zhongfu IndustrialLtd. The company's largest shareholder is Maxon Limited, with ownership of 20%. Meanwhile, the second and third largest shareholders, hold 6.7% and 4.6%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Henan Zhongfu IndustrialLtd

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can see that insiders own shares in Henan Zhongfu Industrial Co.,Ltd. This is a big company, so it is good to see this level of alignment. Insiders own CN¥193m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 55% of Henan Zhongfu IndustrialLtd shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

Private equity firms hold a 6.7% stake in Henan Zhongfu IndustrialLtd. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 22%, of the Henan Zhongfu IndustrialLtd stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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.

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.