Institutions along with retail investors who hold considerable shares inZhongrun Resources Investment Corporation (SZSE:000506) come under pressure; lose 18% of holdings value

Key Insights

• Zhongrun Resources Investment's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 14 investors have a majority stake in the company with 42% ownership
• Institutions own 30% of Zhongrun Resources Investment

A look at the shareholders of Zhongrun Resources Investment Corporation (SZSE:000506) can tell us which group is most powerful. The group holding the most number of shares in the company, around 58% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 30% shares weren’t spared from last week’s CN¥242m market cap drop, retail investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Zhongrun Resources Investment, beginning with the chart below.

Check out our latest analysis for Zhongrun Resources Investment

What Does The Institutional Ownership Tell Us About Zhongrun Resources Investment?

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.

We can see that Zhongrun Resources Investment does have institutional investors; and they hold a good portion of the company's stock. 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 Zhongrun Resources Investment, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Zhongrun Resources Investment. Ransheng (Ningbo) Equity Investment Fund Management Co., Ltd. is currently the largest shareholder, with 25% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.1% and 4.9%, of the shares outstanding, respectively.

Our studies suggest that the top 14 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Zhongrun Resources Investment

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public -- including retail investors -- own 58% of Zhongrun Resources Investment. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With a stake of 7.1%, private equity firms could influence the Zhongrun Resources Investment board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 4.9%, of the Zhongrun Resources Investment stock. 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:

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. To that end, you should learn about the 2 warning signs we've spotted with Zhongrun Resources Investment (including 1 which is significant) .

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