Yunnan Energy New Material Co., Ltd. (SZSE:002812) surges 6.5%; retail investors who own 37% shares profited along with insiders

Key Insights

• Significant control over Yunnan Energy New Material by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 10 investors have a majority stake in the company with 50% ownership
• 31% of Yunnan Energy New Material is held by insiders

To get a sense of who is truly in control of Yunnan Energy New Material Co., Ltd. (SZSE:002812), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 37% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that benefitted the most from last week’s CN¥1.8b market cap gain, insiders too had a 31% share in those profits.

Let's delve deeper into each type of owner of Yunnan Energy New Material, beginning with the chart below.

See our latest analysis for Yunnan Energy New Material

What Does The Institutional Ownership Tell Us About Yunnan Energy New Material?

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.

As you can see, institutional investors have a fair amount of stake in Yunnan Energy New Material. 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. 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 Yunnan Energy New Material's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Yunnan Energy New Material. Looking at our data, we can see that the largest shareholder is Xiao Li with 13% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 7.4% by the third-largest shareholder. Furthermore, CEO Xiaohua Li is the owner of 7.1% of the company's shares.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Yunnan Energy New Material

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Yunnan Energy New Material Co., Ltd.. Insiders own CN¥9.1b worth of shares in the CN¥30b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yunnan Energy New Material. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 16%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Yunnan Energy New Material (of which 1 is concerning!) you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.