China Tungsten And Hightech Materials Co.,Ltd's (SZSE:000657) stock price dropped 7.4% last week; private companies would not be happy

Key Insights

• Significant control over China Tungsten And Hightech MaterialsLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 2 investors have a majority stake in the company with 55% ownership
• 12% of China Tungsten And Hightech MaterialsLtd is held by Institutions

Every investor in China Tungsten And Hightech Materials Co.,Ltd (SZSE:000657) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 55% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by CN¥1.1b.

Let's take a closer look to see what the different types of shareholders can tell us about China Tungsten And Hightech MaterialsLtd.

Check out our latest analysis for China Tungsten And Hightech MaterialsLtd

What Does The Institutional Ownership Tell Us About China Tungsten And Hightech 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 China Tungsten And Hightech MaterialsLtd. 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 China Tungsten And Hightech MaterialsLtd, (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 China Tungsten And Hightech MaterialsLtd. China Minmetals Corporation is currently the largest shareholder, with 50% of shares outstanding. With 4.8% and 1.1% of the shares outstanding respectively, Guoxin Investment Co., Ltd. and First State Cinda Fund Management Company Limited are the second and third largest shareholders.

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 55% stake.

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

Insider Ownership Of China Tungsten And Hightech MaterialsLtd

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 information suggests that China Tungsten And Hightech Materials Co.,Ltd insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥36m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 55%, of the China Tungsten And Hightech MaterialsLtd 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - China Tungsten And Hightech MaterialsLtd has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.