Xinyu Iron & Steel Co., Ltd's (SHSE:600782) last week's 3.6% decline must have disappointed private companies who have a significant stake

Key Insights

• Significant control over Xinyu Iron & Steel by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 51% of the company
• 14% of Xinyu Iron & Steel is held by Institutions

A look at the shareholders of Xinyu Iron & Steel Co., Ltd (SHSE:600782) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 3.6% decline in share price, private companies suffered the most losses.

Let's delve deeper into each type of owner of Xinyu Iron & Steel, beginning with the chart below.

View our latest analysis for Xinyu Iron & Steel

What Does The Institutional Ownership Tell Us About Xinyu Iron & Steel?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Xinyu Iron & Steel does have institutional investors; and they hold a good portion of the company's stock. 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 Xinyu Iron & Steel'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 Xinyu Iron & Steel. Our data shows that China Baowu Steel Group Co.,Ltd is the largest shareholder with 46% of shares outstanding. For context, the second largest shareholder holds about 2.4% of the shares outstanding, followed by an ownership of 1.7% by the third-largest shareholder.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Xinyu Iron & Steel

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. 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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinyu Iron & Steel. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 46%, of the company's shares. 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 Xinyu Iron & Steel better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Xinyu Iron & Steel you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.