Retail investors are Xinxiang Chemical Fiber Co., Ltd.'s (SZSE:000949) biggest owners and were hit after market cap dropped CN¥1.2b

Key Insights

• Significant control over Xinxiang Chemical Fiber by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 22 investors have a majority stake in the company with 50% ownership
• Institutional ownership in Xinxiang Chemical Fiber is 20%

A look at the shareholders of Xinxiang Chemical Fiber Co., Ltd. (SZSE:000949) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥1.2b.

Let's take a closer look to see what the different types of shareholders can tell us about Xinxiang Chemical Fiber.

View our latest analysis for Xinxiang Chemical Fiber

What Does The Institutional Ownership Tell Us About Xinxiang Chemical Fiber?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Xinxiang Chemical Fiber. 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 Xinxiang Chemical Fiber's historic earnings and revenue below, but keep in mind there's always more to the story.

Xinxiang Chemical Fiber is not owned by hedge funds. The company's largest shareholder is Xinxiang Bailu Investment Group Co., Ltd., with ownership of 27%. Meanwhile, the second and third largest shareholders, hold 12% and 1.8%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 22 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Xinxiang Chemical Fiber

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.

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 information suggests that Xinxiang Chemical Fiber Co., Ltd. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about CN¥2.6m worth of stock. This compares to a market capitalization of CN¥7.1b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 50% stake in Xinxiang Chemical Fiber. 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 Company Ownership

We can see that Private Companies own 30%, of the shares on issue. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Xinxiang Chemical Fiber (of which 1 is significant!) you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.