CEO Bing Kun Xie, Fujian Kuncai Material Technology Co., Ltd.'s (SHSE:603826) largest shareholder sees value of holdings go down 3.3% after recent drop

Key Insights

• Fujian Kuncai Material Technology's significant insider ownership suggests inherent interests in company's expansion
• 56% of the company is held by a single shareholder (Bing Kun Xie)
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Fujian Kuncai Material Technology Co., Ltd. (SHSE:603826), then you'll have to look at the makeup of its share registry. With 70% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 3.3% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Fujian Kuncai Material Technology.

View our latest analysis for Fujian Kuncai Material Technology

What Does The Institutional Ownership Tell Us About Fujian Kuncai Material Technology?

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 Fujian Kuncai Material Technology. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Fujian Kuncai Material Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Fujian Kuncai Material Technology. With a 56% stake, CEO Bing Kun Xie is the largest shareholder. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. For context, the second largest shareholder holds about 8.8% of the shares outstanding, followed by an ownership of 4.3% by the third-largest shareholder.

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 Fujian Kuncai Material Technology

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 information suggests that insiders own more than half of Fujian Kuncai Material Technology Co., Ltd.. This gives them effective control of the company. That means insiders have a very meaningful CN¥15b stake in this CN¥22b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 4.1%, of the Fujian Kuncai Material Technology 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. Take risks for example - Fujian Kuncai Material Technology has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.