The recent CN¥356m market cap decrease is likely to have disappointed insiders invested in Guangzhou Sanfu New Materials Technology Co.,Ltd (SHSE:688359)

Key Insights

• Guangzhou Sanfu New Materials TechnologyLtd's significant insider ownership suggests inherent interests in company's expansion
• 50% of the business is held by the top 3 shareholders
• 11% of Guangzhou Sanfu New Materials TechnologyLtd is held by Institutions

A look at the shareholders of Guangzhou Sanfu New Materials Technology Co.,Ltd (SHSE:688359) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥3.0b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Guangzhou Sanfu New Materials TechnologyLtd.

Check out our latest analysis for Guangzhou Sanfu New Materials TechnologyLtd

What Does The Institutional Ownership Tell Us About Guangzhou Sanfu New Materials 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.

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

Hedge funds don't have many shares in Guangzhou Sanfu New Materials TechnologyLtd. Our data shows that Wenlong Shangguan is the largest shareholder with 30% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder. Chenghong Qu, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Guangzhou Sanfu New Materials TechnologyLtd

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.

Our most recent data indicates that insiders own the majority of Guangzhou Sanfu New Materials Technology Co.,Ltd. This means they can collectively make decisions for the company. That means they own CN¥1.5b worth of shares in the CN¥3.0b 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 36% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangzhou Sanfu New Materials TechnologyLtd better, we need to consider many other factors. Be aware that Guangzhou Sanfu New Materials TechnologyLtd is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

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

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