Zhejiang Fulai New Material Co.,Ltd. (SHSE:605488) adds CN¥480m in market cap and insiders have a 59% stake in that gain

Key Insights

• Significant insider control over Zhejiang Fulai New MaterialLtd implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 54% ownership
• 12% of Zhejiang Fulai New MaterialLtd is held by Institutions

Every investor in Zhejiang Fulai New Material Co.,Ltd. (SHSE:605488) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 7.7% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Fulai New MaterialLtd.

View our latest analysis for Zhejiang Fulai New MaterialLtd

What Does The Institutional Ownership Tell Us About Zhejiang Fulai New MaterialLtd?

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 Zhejiang Fulai New MaterialLtd. 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. 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 Zhejiang Fulai New MaterialLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Zhejiang Fulai New MaterialLtd. Looking at our data, we can see that the largest shareholder is Houjun Xia with 48% of shares outstanding. With 6.3% and 5.7% of the shares outstanding respectively, Daji Tu and Jiaxing Aggressive Investment Management Partnership Enterprise (Limited Partnership) are the second and third largest shareholders. Furthermore, CEO Yaobang Li is the owner of 0.5% of the company's shares.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang Fulai New MaterialLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own the majority of Zhejiang Fulai New Material Co.,Ltd.. This means they can collectively make decisions for the company. So they have a CN¥4.0b stake in this CN¥6.7b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% 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 6.1%, of the Zhejiang Fulai New MaterialLtd 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Fulai New MaterialLtd better, we need to consider many other factors. Take risks for example - Zhejiang Fulai New MaterialLtd has 4 warning signs (and 3 which don't sit too well with us) we think you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.