Owning 63% in Red Avenue New Materials Group Co., Ltd. (SHSE:603650) means that insiders are heavily invested in the company's future

Key Insights

• Insiders appear to have a vested interest in Red Avenue New Materials Group's growth, as seen by their sizeable ownership
• Ning Zhang owns 63% of the company
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

If you want to know who really controls Red Avenue New Materials Group Co., Ltd. (SHSE:603650), then you'll have to look at the makeup of its share registry. With 63% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

So it follows, every decision made by insiders of Red Avenue New Materials Group regarding the company's future would be crucial to them.

In the chart below, we zoom in on the different ownership groups of Red Avenue New Materials Group.

See our latest analysis for Red Avenue New Materials Group

What Does The Institutional Ownership Tell Us About Red Avenue New Materials Group?

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.

Less than 5% of Red Avenue New Materials Group is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Red Avenue New Materials Group. Ning Zhang is currently the largest shareholder, with 63% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 5.2% and 3.0% of the shares outstanding respectively, Zhoushan Yutong Venture Capital Partnership Enterprise (Limited Partnership) and Shaanxi Coal and Chemical Industry Group Co.,Ltd. are the second and third largest shareholders.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Red Avenue New Materials Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders own more than half of Red Avenue New Materials Group Co., Ltd.. This gives them effective control of the company. That means insiders have a very meaningful CN¥14b stake in this CN¥22b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Red Avenue New Materials Group. 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 8.3%, 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.

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. To that end, you should be aware of the 2 warning signs we've spotted with Red Avenue New Materials Group .

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.