Individual investors invested in Xinxing Ductile Iron Pipes Co., Ltd. (SZSE:000778) copped the brunt of last week's CN¥475m market cap decline

Key Insights

• Significant control over Xinxing Ductile Iron Pipes by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 47% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Xinxing Ductile Iron Pipes Co., Ltd. (SZSE:000778), it is important to understand the ownership structure of the business. With 53% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, individual investors endured the biggest losses as the stock fell by 3.4%.

Let's take a closer look to see what the different types of shareholders can tell us about Xinxing Ductile Iron Pipes.

View our latest analysis for Xinxing Ductile Iron Pipes

What Does The Institutional Ownership Tell Us About Xinxing Ductile Iron Pipes?

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.

Xinxing Ductile Iron Pipes already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Xinxing Ductile Iron Pipes' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Xinxing Ductile Iron Pipes. Xinxing Cathay International Group Co.,Ltd. is currently the company's largest shareholder with 39% of shares outstanding. The second and third largest shareholders are National Council for Social Security Fund and ICBC Credit Suisse Asset Management Co., Ltd., with an equal amount of shares to their name at 1.9%.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. 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 Xinxing Ductile Iron Pipes

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of Xinxing Ductile Iron Pipes Co., Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥80m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 53% stake in Xinxing Ductile Iron Pipes, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 39%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Xinxing Ductile Iron Pipes , and understanding them should be part of your investment process.

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.

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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.