Insiders are the top stockholders in Zhejiang Guanghua Technology Co.,Ltd. (SZSE:001333), and the recent 10% drop might have disappointed them

Key Insights

• Zhejiang Guanghua TechnologyLtd's significant insider ownership suggests inherent interests in company's expansion
• Jiefeng Sun owns 55% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Zhejiang Guanghua Technology Co.,Ltd. (SZSE:001333), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 60% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥2.2b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Guanghua TechnologyLtd.

Check out our latest analysis for Zhejiang Guanghua TechnologyLtd

What Does The Institutional Ownership Tell Us About Zhejiang Guanghua TechnologyLtd?

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 Zhejiang Guanghua TechnologyLtd. 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. 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 Zhejiang Guanghua TechnologyLtd, (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 Zhejiang Guanghua TechnologyLtd. Our data shows that Jiefeng Sun is the largest shareholder with 55% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. The second and third largest shareholders are Chunhai Yao and Haining Fenghua Investment Consulting Partnership Enterprise (Limited Partnership), with an equal amount of shares to their name at 5.5%. Chunhai Yao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang Guanghua TechnologyLtd

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 that insiders own more than half the Zhejiang Guanghua Technology Co.,Ltd. stock. This gives them a lot of power. So they have a CN¥1.3b stake in this CN¥2.2b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in Zhejiang Guanghua TechnologyLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 5.8%, of the Zhejiang Guanghua TechnologyLtd stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Guanghua TechnologyLtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Zhejiang Guanghua TechnologyLtd (of which 2 make us uncomfortable!) you should know about.

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.