Jiangsu Lanfeng Bio-chemical Co.,Ltd's (SZSE:002513) stock price dropped 12% last week; retail investors would not be happy

Key Insights

• Jiangsu Lanfeng Bio-chemicalLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 11 shareholders own 51% of the company
• 24% of Jiangsu Lanfeng Bio-chemicalLtd is held by insiders

Every investor in Jiangsu Lanfeng Bio-chemical Co.,Ltd (SZSE:002513) should be aware of the most powerful shareholder groups. With 45% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of retail investors took a hit after last week’s 12% price drop, insiders with their 24% also suffered.

In the chart below, we zoom in on the different ownership groups of Jiangsu Lanfeng Bio-chemicalLtd.

Check out our latest analysis for Jiangsu Lanfeng Bio-chemicalLtd

What Does The Institutional Ownership Tell Us About Jiangsu Lanfeng Bio-chemicalLtd?

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.

Jiangsu Lanfeng Bio-chemicalLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Jiangsu Lanfeng Bio-chemicalLtd's earnings history below. Of course, the future is what really matters.

Jiangsu Lanfeng Bio-chemicalLtd is not owned by hedge funds. The company's largest shareholder is Xu Zheng, with ownership of 18%. Hainan Wenqin Private Fund Management Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 9.0% of common stock, and Anhui Xunshun Investment Partnership Enterprise (Limited Partnership) holds about 7.6% of the company stock. Furthermore, CEO Anping Liu is the owner of 0.9% of the company's shares.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Jiangsu Lanfeng Bio-chemicalLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

It seems insiders own a significant proportion of Jiangsu Lanfeng Bio-chemical Co.,Ltd. Insiders own CN¥325m worth of shares in the CN¥1.3b 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, who are usually individual investors, hold a 45% stake in Jiangsu Lanfeng Bio-chemicalLtd. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 15%, 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:

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. Be aware that Jiangsu Lanfeng Bio-chemicalLtd is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.