Private companies invested in Luyang Energy-Saving Materials Co., Ltd. (SZSE:002088) copped the brunt of last week's CN¥384m market cap decline

Key Insights

• The considerable ownership by private companies in Luyang Energy-Saving Materials indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Unifrax Asia-Pacific Holding Limited with a 52% stake
• Insiders own 12% of Luyang Energy-Saving Materials

Every investor in Luyang Energy-Saving Materials Co., Ltd. (SZSE:002088) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 55% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private companies endured the biggest losses as the stock fell by 5.0%.

Let's take a closer look to see what the different types of shareholders can tell us about Luyang Energy-Saving Materials.

See our latest analysis for Luyang Energy-Saving Materials

What Does The Institutional Ownership Tell Us About Luyang Energy-Saving Materials?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Luyang Energy-Saving Materials does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Luyang Energy-Saving Materials' earnings history below. Of course, the future is what really matters.

Luyang Energy-Saving Materials is not owned by hedge funds. Unifrax Asia-Pacific Holding Limited is currently the company's largest shareholder with 52% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 11% and 2.8% of the shares outstanding respectively, Cheng Lu and Yiyuan Nanma Street Collective Assets Management Center are the second and third largest shareholders.

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 Luyang Energy-Saving Materials

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Luyang Energy-Saving Materials Co., Ltd.. Insiders own CN¥876m worth of shares in the CN¥7.2b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. 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 55%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Luyang Energy-Saving Materials , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.