Kangda New Materials (Group) Co., Ltd.'s (SZSE:002669) stock price dropped 11% last week; individual investors would not be happy

Key Insights

• Kangda New Materials (Group)'s significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 23 shareholders own 43% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Kangda New Materials (Group) Co., Ltd. (SZSE:002669), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, individual investors endured the biggest losses as the stock fell by 11%.

Let's delve deeper into each type of owner of Kangda New Materials (Group), beginning with the chart below.

See our latest analysis for Kangda New Materials (Group)

What Does The Institutional Ownership Tell Us About Kangda New Materials (Group)?

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.

As you can see, institutional investors have a fair amount of stake in Kangda New Materials (Group). 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 Kangda New Materials (Group)'s earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Kangda New Materials (Group). Tangshan Financial Industry Incubator Group Co., Ltd. is currently the company's largest shareholder with 29% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.3% and 2.1%, of the shares outstanding, respectively.

On studying our ownership data, we found that 23 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Kangda New Materials (Group)

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 report that insiders do own shares in Kangda New Materials (Group) Co., Ltd.. It has a market capitalization of just CN¥2.9b, and insiders have CN¥86m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 57% of Kangda New Materials (Group). 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 Equity Ownership

Private equity firms hold a 29% stake in Kangda New Materials (Group). This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Kangda New Materials (Group) better, we need to consider many other factors. Be aware that Kangda New Materials (Group) is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.