Jiangxi Chenguang New Materials Company Limited's (SHSE:605399) stock price dropped 13% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in Jiangxi Chenguang New Materials indicates that they collectively have a greater say in management and business strategy
• 63% of the business is held by the top 2 shareholders
• 34% of Jiangxi Chenguang New Materials is held by insiders

A look at the shareholders of Jiangxi Chenguang New Materials Company Limited (SHSE:605399) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 36% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 34% came under pressure after market cap dropped to CN¥3.5b last week,private companies took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Jiangxi Chenguang New Materials.

Check out our latest analysis for Jiangxi Chenguang New Materials

What Does The Institutional Ownership Tell Us About Jiangxi Chenguang New Materials?

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.

Since institutions own only a small portion of Jiangxi Chenguang New Materials, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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.

Jiangxi Chenguang New Materials is not owned by hedge funds. Jianfeng Ding is currently the largest shareholder, with 33% of shares outstanding. HK Nobel Advanced Materials Co., Ltd. is the second largest shareholder owning 30% of common stock, and Jiangsu Haojing Borui Landscaping Engineering Co., Ltd. holds about 4.4% of the company stock.

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.

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. 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 Jiangxi Chenguang New Materials

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Jiangxi Chenguang New Materials Company Limited. It has a market capitalization of just CN¥3.5b, and insiders have CN¥1.2b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 25% 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

Our data indicates that Private Companies hold 36%, 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. Be aware that Jiangxi Chenguang New Materials is showing 4 warning signs in our investment analysis , and 1 of those is significant...

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.