Suzhou Yangtze New Materials Co., Ltd.'s (SZSE:002652) market cap dropped CN¥123m last week; Retail investors bore the brunt

Key Insights

• Significant control over Suzhou Yangtze New Materials by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 16 shareholders own 44% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Suzhou Yangtze New Materials Co., Ltd. (SZSE:002652), it is important to understand the ownership structure of the business. With 56% 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.

As a result, retail investors as a group endured the highest losses last week after market cap fell by CN¥123m.

In the chart below, we zoom in on the different ownership groups of Suzhou Yangtze New Materials.

Check out our latest analysis for Suzhou Yangtze New Materials

What Does The Institutional Ownership Tell Us About Suzhou Yangtze New Materials?

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 Suzhou Yangtze New Materials 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. 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 Suzhou Yangtze New Materials, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Suzhou Yangtze New Materials. Our data shows that Nanning Yiran Senior Care Industry Partnership Enterprise (Limited Partnership) is the largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.9% and 2.0%, of the shares outstanding, respectively.

Our studies suggest that the top 16 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 Suzhou Yangtze New Materials

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own some shares in Suzhou Yangtze New Materials Co., Ltd.. In their own names, insiders own CN¥51m worth of stock in the CN¥1.1b company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 56% stake in Suzhou Yangtze New Materials, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 34%, of the Suzhou Yangtze New Materials 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Suzhou Yangtze New Materials , and understanding them should be part of your investment process.

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.