Individual investors are Longxing Chemical Stock Co., Ltd.'s (SZSE:002442) biggest owners and were hit after market cap dropped CN¥299m

Key Insights

• The considerable ownership by individual investors in Longxing Chemical Stock indicates that they collectively have a greater say in management and business strategy
• The top 23 shareholders own 43% of the company
• Insiders own 27% of Longxing Chemical Stock

A look at the shareholders of Longxing Chemical Stock Co., Ltd. (SZSE:002442) can tell us which group is most powerful. The group holding the most number of shares in the company, around 57% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 12% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 27% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Longxing Chemical Stock.

See our latest analysis for Longxing Chemical Stock

What Does The Lack Of Institutional Ownership Tell Us About Longxing Chemical Stock?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Longxing Chemical Stock might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Longxing Chemical Stock. Jiangshan Liu is currently the company's largest shareholder with 20% of shares outstanding. Beta Pharmaceutical Inc is the second largest shareholder owning 15% of common stock, and Ju Yu holds about 3.3% of the company stock.

A deeper look at our ownership data shows that the top 23 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Longxing Chemical Stock

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our information suggests that insiders maintain a significant holding in Longxing Chemical Stock Co., Ltd.. Insiders own CN¥585m worth of shares in the CN¥2.2b 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, mostly comprising of individual investors, collectively holds 57% of Longxing Chemical Stock shares. 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 15%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 1 warning sign for Longxing Chemical Stock that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.