After the recent decline, Shanghai Aladdin Biochemical Technology Co.,Ltd. (SHSE:688179) CEO Jiuzhen Xu's holdings have lost 8.5% of their value

Key Insights

• Significant insider control over Shanghai Aladdin Biochemical TechnologyLtd implies vested interests in company growth
• 51% of the business is held by the top 5 shareholders
• 13% of Shanghai Aladdin Biochemical TechnologyLtd is held by Institutions

To get a sense of who is truly in control of Shanghai Aladdin Biochemical Technology Co.,Ltd. (SHSE:688179), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 8.5% decline in share price, insiders suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Aladdin Biochemical TechnologyLtd.

Check out our latest analysis for Shanghai Aladdin Biochemical TechnologyLtd

What Does The Institutional Ownership Tell Us About Shanghai Aladdin Biochemical TechnologyLtd?

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 Shanghai Aladdin Biochemical TechnologyLtd. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Shanghai Aladdin Biochemical TechnologyLtd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Shanghai Aladdin Biochemical TechnologyLtd. With a 28% stake, CEO Jiuzhen Xu is the largest shareholder. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 4.3% by the third-largest shareholder. Interestingly, the second-largest shareholder, Liping Zhao is also Other Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shanghai Aladdin Biochemical TechnologyLtd

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

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.

Our information suggests that insiders maintain a significant holding in Shanghai Aladdin Biochemical Technology Co.,Ltd.. Insiders own CN¥1.7b worth of shares in the CN¥4.0b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 40% 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 4.4%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. For instance, we've identified 1 warning sign for Shanghai Aladdin Biochemical TechnologyLtd 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.