Shanghai Yongguan Adhesive Products Corp., Ltd. (SHSE:603681) CEO Xinmin Lu's holdings dropped 11% in value as a result of the recent pullback

Key Insights

• Insiders appear to have a vested interest in Shanghai Yongguan Adhesive Products' growth, as seen by their sizeable ownership
• The top 4 shareholders own 51% of the company
• Institutional ownership in Shanghai Yongguan Adhesive Products is 18%

Every investor in Shanghai Yongguan Adhesive Products Corp., Ltd. (SHSE:603681) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥2.1b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Yongguan Adhesive Products.

View our latest analysis for Shanghai Yongguan Adhesive Products

What Does The Institutional Ownership Tell Us About Shanghai Yongguan Adhesive Products?

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 Shanghai Yongguan Adhesive Products does have institutional investors; and they hold a good portion of the company's stock. 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 Shanghai Yongguan Adhesive Products' historic earnings and revenue below, but keep in mind there's always more to the story.

Shanghai Yongguan Adhesive Products is not owned by hedge funds. With a 33% stake, CEO Xinmin Lu is the largest shareholder. In comparison, the second and third largest shareholders hold about 8.3% and 6.6% of the stock.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Shanghai Yongguan Adhesive Products

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Shanghai Yongguan Adhesive Products Corp., Ltd.. It has a market capitalization of just CN¥2.1b, and insiders have CN¥1.0b worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 28% 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

It seems that Private Companies own 7.0%, of the Shanghai Yongguan Adhesive Products stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Yongguan Adhesive Products better, we need to consider many other factors. Be aware that Shanghai Yongguan Adhesive Products is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com