Chongqing Sifang New Material Co., Ltd.'s (SHSE:605122) most bullish insider is CEO Dezhi Li, and their holdings value went up by 15% last week

Key Insights

• Significant insider control over Chongqing Sifang New Material implies vested interests in company growth
• Dezhi Li owns 60% of the company
• 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 Chongqing Sifang New Material Co., Ltd. (SHSE:605122), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 61% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit CN¥1.8b market cap following a 15% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Chongqing Sifang New Material.

See our latest analysis for Chongqing Sifang New Material

What Does The Institutional Ownership Tell Us About Chongqing Sifang 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.

As you can see, institutional investors have a fair amount of stake in Chongqing Sifang New Material. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Chongqing Sifang New Material, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Chongqing Sifang New Material. Looking at our data, we can see that the largest shareholder is the CEO Dezhi Li with 60% of shares outstanding. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. For context, the second largest shareholder holds about 2.8% of the shares outstanding, followed by an ownership of 0.9% by the third-largest shareholder.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Chongqing Sifang 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 the majority of Chongqing Sifang New Material Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥1.1b stake in this CN¥1.8b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Chongqing Sifang New Material better, we need to consider many other factors. For example, we've discovered 1 warning sign for Chongqing Sifang New Material that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.