With 42% ownership, Yongxing Special Materials Technology Co.,Ltd (SZSE:002756) insiders have a lot riding on the company's future

Key Insights

• Insiders appear to have a vested interest in Yongxing Special Materials TechnologyLtd's growth, as seen by their sizeable ownership
• The top 5 shareholders own 51% of the company
• 17% of Yongxing Special Materials TechnologyLtd is held by Institutions

Every investor in Yongxing Special Materials Technology Co.,Ltd (SZSE:002756) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Yongxing Special Materials TechnologyLtd.

See our latest analysis for Yongxing Special Materials TechnologyLtd

What Does The Institutional Ownership Tell Us About Yongxing Special Materials TechnologyLtd?

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 Yongxing Special Materials TechnologyLtd 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Yongxing Special Materials TechnologyLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Yongxing Special Materials TechnologyLtd is not owned by hedge funds. With a 36% stake, CEO Xingjiang Gao is the largest shareholder. For context, the second largest shareholder holds about 7.3% of the shares outstanding, followed by an ownership of 2.6% by the third-largest shareholder.

On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Yongxing Special Materials TechnologyLtd

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 Yongxing Special Materials Technology Co.,Ltd. Insiders own CN¥11b worth of shares in the CN¥25b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yongxing Special Materials TechnologyLtd. 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.

Public Company Ownership

It appears to us that public companies own 7.3% of Yongxing Special Materials TechnologyLtd. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Yongxing Special Materials TechnologyLtd better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Yongxing Special Materials TechnologyLtd you should be aware of, and 1 of them doesn't sit too well with us.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.