Private companies in Zhejiang Weihua New Material Co., Ltd. (SHSE:603310) are its biggest bettors, and their bets paid off as stock gained 10% last week

Key Insights

• Zhejiang Weihua New Material's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 2 investors have a majority stake in the company with 54% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Zhejiang Weihua New Material Co., Ltd. (SHSE:603310) can tell us which group is most powerful. With 38% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week’s 10% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Weihua New Material.

View our latest analysis for Zhejiang Weihua New Material

What Does The Institutional Ownership Tell Us About Zhejiang Weihua New Material?

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.

Zhejiang Weihua New Material already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Zhejiang Weihua New Material'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 Zhejiang Weihua New Material. Our data shows that Dongyang Yinghua Holding Co., Ltd. is the largest shareholder with 38% of shares outstanding. With 15% and 2.6% of the shares outstanding respectively, Zhejiang Runtu Co., Ltd. and Beijing Taiyou Investment Management Co., Ltd. are the second and third largest shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang Weihua New Material

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our most recent data indicates that insiders own some shares in Zhejiang Weihua New Material Co., Ltd.. As individuals, the insiders collectively own CN¥288m worth of the CN¥6.9b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 34% stake in the company, and hence can't easily be ignored. 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 38%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

Public companies currently own 15% of Zhejiang Weihua New Material stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for Zhejiang Weihua New Material you should be aware of, and 1 of them is significant.

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.