Insiders are the top stockholders in Sokan New Materials Group Co., Ltd. (SHSE:688157), and the recent 8.0% drop might have disappointed them

Key Insights

• Sokan New Materials Group's significant insider ownership suggests inherent interests in company's expansion
• A total of 2 investors have a majority stake in the company with 56% ownership
• Institutions own 16% of Sokan New Materials Group

Every investor in Sokan New Materials Group Co., Ltd. (SHSE:688157) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 8.0% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Sokan New Materials Group.

See our latest analysis for Sokan New Materials Group

What Does The Institutional Ownership Tell Us About Sokan 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.

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

Sokan New Materials Group is not owned by hedge funds. Yunjian Lin is currently the largest shareholder, with 48% of shares outstanding. With 7.8% and 2.4% of the shares outstanding respectively, Heze Songyuan Enterprise Management Consulting Partnership Enterprise (Limited Partnership) and Song Wu are the second and third largest shareholders. Song Wu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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 56% 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Sokan New Materials Group

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.

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 Sokan New Materials Group Co., Ltd.. This means they can collectively make decisions for the company. That means they own CN¥2.4b worth of shares in the CN¥4.3b company. That's quite meaningful. 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 20% 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 Company Ownership

We can see that Private Companies own 7.8%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Sokan New Materials Group (1 shouldn't be ignored) that you should be aware of.

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.