Guangdong Fangyuan New Materials Group Co., Ltd.'s (SHSE:688148) 19% gain last week benefited both retail investors who own 41% as well as insiders

Key Insights

• Significant control over Guangdong Fangyuan New Materials Group by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 11 shareholders
• Insider ownership in Guangdong Fangyuan New Materials Group is 23%

If you want to know who really controls Guangdong Fangyuan New Materials Group Co., Ltd. (SHSE:688148), then you'll have to look at the makeup of its share registry. With 41% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that reaped the most benefits after last week’s 19% price gain, insiders also received a 23% cut.

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

View our latest analysis for Guangdong Fangyuan New Materials Group

What Does The Institutional Ownership Tell Us About Guangdong Fangyuan New Materials Group?

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 Guangdong Fangyuan New Materials Group. 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. 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 Guangdong Fangyuan New Materials Group, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Guangdong Fangyuan New Materials Group. The company's CEO Aiping Luo is the largest shareholder with 15% of shares outstanding. Wukuang Innovation Equity Investment Fund Management (Ningbo) Co., Ltd. is the second largest shareholder owning 8.1% of common stock, and BTR New Material Group Co., Ltd holds about 5.1% of the company stock.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Guangdong Fangyuan New Materials Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems insiders own a significant proportion of Guangdong Fangyuan New Materials Group Co., Ltd.. Insiders have a CN¥494m stake in this CN¥2.1b business. 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, who are usually individual investors, hold a 41% stake in Guangdong Fangyuan New Materials Group. 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.

Private Equity Ownership

With a stake of 13%, private equity firms could influence the Guangdong Fangyuan New Materials Group board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Public Company Ownership

We can see that public companies hold 5.1% of the Guangdong Fangyuan New Materials Group shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangdong Fangyuan New Materials Group better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Guangdong Fangyuan New Materials Group .

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.