Individual investors are Guangdong Fangyuan New Materials Group Co., Ltd.'s (SHSE:688148) biggest owners and were hit after market cap dropped CN¥261m

Key Insights

• Guangdong Fangyuan New Materials Group's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 11 investors have a majority stake in the company with 50% ownership
• Insiders own 23% of Guangdong Fangyuan New Materials Group

Every investor in Guangdong Fangyuan New Materials Group Co., Ltd. (SHSE:688148) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 23% shares weren’t spared from last week’s CN¥261m market cap drop, individual investors as a group suffered the maximum losses

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?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Guangdong Fangyuan New Materials Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Guangdong Fangyuan New Materials Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Guangdong Fangyuan New Materials Group is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Aiping Luo with 15% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.5% and 5.1%, of the shares outstanding, respectively.

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 it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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.

It seems insiders own a significant proportion of Guangdong Fangyuan New Materials Group Co., Ltd.. Insiders have a CN¥485m 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-- including retail investors -- own 39% 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.

Private Equity Ownership

With a stake of 14%, private equity firms could influence the Guangdong Fangyuan New Materials Group board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

It appears to us that public companies own 5.1% of Guangdong Fangyuan New Materials Group. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Guangdong Fangyuan New Materials Group (of which 1 is a bit concerning!) 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com