Jiangxi Yuean Advanced Materials Co.,Ltd.'s (SHSE:688786) most bullish insider, Top Key Executive Shangkui Li must be pleased with the recent 12% gain

Key Insights

• Insiders appear to have a vested interest in Jiangxi Yuean Advanced MaterialsLtd's growth, as seen by their sizeable ownership
• 52% of the business is held by the top 6 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Jiangxi Yuean Advanced Materials Co.,Ltd. (SHSE:688786), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥355m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Jiangxi Yuean Advanced MaterialsLtd.

See our latest analysis for Jiangxi Yuean Advanced MaterialsLtd

What Does The Institutional Ownership Tell Us About Jiangxi Yuean Advanced MaterialsLtd?

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 Jiangxi Yuean Advanced MaterialsLtd. 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 Jiangxi Yuean Advanced MaterialsLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Jiangxi Yuean Advanced MaterialsLtd. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Jiangxi Yuean Advanced MaterialsLtd's case, its Top Key Executive, Shangkui Li, is the largest shareholder, holding 27% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.6% and 6.3%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Yunbao Yu is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders. Furthermore, CEO Bing Wang is the owner of 2.2% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. 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 Jiangxi Yuean Advanced MaterialsLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Jiangxi Yuean Advanced Materials Co.,Ltd.. It has a market capitalization of just CN¥3.3b, and insiders have CN¥1.4b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 37% stake in Jiangxi Yuean Advanced MaterialsLtd. 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

Private equity firms hold a 6.3% stake in Jiangxi Yuean Advanced MaterialsLtd. This suggests they can be influential in key policy decisions. 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.

Private Company Ownership

Our data indicates that Private Companies hold 6.6%, of the company's shares. 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. To that end, you should learn about the 2 warning signs we've spotted with Jiangxi Yuean Advanced MaterialsLtd (including 1 which shouldn't be ignored) .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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