Jiangsu Zhongsheng Gaoke Environmental Co.,Ltd.'s (SZSE:002778) market cap dropped CN¥143m last week; Individual investors bore the brunt

Key Insights

• Jiangsu Zhongsheng Gaoke EnvironmentalLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 10 shareholders own 50% of the company
• 11% of Jiangsu Zhongsheng Gaoke EnvironmentalLtd is held by insiders

To get a sense of who is truly in control of Jiangsu Zhongsheng Gaoke Environmental Co.,Ltd. (SZSE:002778), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors as a group endured the highest losses last week after market cap fell by CN¥143m.

Let's delve deeper into each type of owner of Jiangsu Zhongsheng Gaoke EnvironmentalLtd, beginning with the chart below.

Check out our latest analysis for Jiangsu Zhongsheng Gaoke EnvironmentalLtd

What Does The Institutional Ownership Tell Us About Jiangsu Zhongsheng Gaoke EnvironmentalLtd?

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 Zhongsheng Gaoke EnvironmentalLtd 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. 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 Jiangsu Zhongsheng Gaoke EnvironmentalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Jiangsu Zhongsheng Gaoke EnvironmentalLtd. Suzhou Wuzhong Tiankai Huida Equity Investment Partnership Enterprise (Limited Partnership) is currently the largest shareholder, with 22% of shares outstanding. For context, the second largest shareholder holds about 8.3% of the shares outstanding, followed by an ownership of 7.1% by the third-largest shareholder.

We did some more digging and found that 10 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Jiangsu Zhongsheng Gaoke EnvironmentalLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 a reasonable proportion of Jiangsu Zhongsheng Gaoke Environmental Co.,Ltd.. It has a market capitalization of just CN¥1.2b, and insiders have CN¥141m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 50% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 22%, private equity firms could influence the Jiangsu Zhongsheng Gaoke EnvironmentalLtd board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 11%, of the Jiangsu Zhongsheng Gaoke EnvironmentalLtd stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Jiangsu Zhongsheng Gaoke EnvironmentalLtd better, we need to consider many other factors. For instance, we've identified 3 warning signs for Jiangsu Zhongsheng Gaoke EnvironmentalLtd (2 are significant) that you should be aware of.

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.