DeHua TB New Decoration Material Co.,Ltd's (SZSE:002043) last week's 5.9% decline must have disappointed private companies who have a significant stake

Key Insights

• Significant control over DeHua TB New Decoration MaterialLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 51% of the company
• 11% of DeHua TB New Decoration MaterialLtd is held by Institutions

Every investor in DeHua TB New Decoration Material Co.,Ltd (SZSE:002043) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 37% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, private companies endured the biggest losses as the stock fell by 5.9%.

Let's delve deeper into each type of owner of DeHua TB New Decoration MaterialLtd, beginning with the chart below.

View our latest analysis for DeHua TB New Decoration MaterialLtd

What Does The Institutional Ownership Tell Us About DeHua TB New Decoration MaterialLtd?

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.

We can see that DeHua TB New Decoration MaterialLtd 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. 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 DeHua TB New Decoration MaterialLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in DeHua TB New Decoration MaterialLtd. The company's largest shareholder is Dehua Group Holding Co., Ltd., with ownership of 37%. Meanwhile, the second and third largest shareholders, hold 6.2% and 5.1%, of the shares outstanding, respectively. Additionally, the company's CEO Lihua Lu directly holds 0.7% of the total shares outstanding.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of DeHua TB New Decoration MaterialLtd

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.

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.

We can see that insiders own shares in DeHua TB New Decoration Material Co.,Ltd. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥717m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over DeHua TB New Decoration MaterialLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 6.2% stake in DeHua TB New Decoration MaterialLtd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 37%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand DeHua TB New Decoration MaterialLtd better, we need to consider many other factors. Be aware that DeHua TB New Decoration MaterialLtd is showing 1 warning sign in our investment analysis , 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.