Yunnan Energy New Material Co., Ltd.'s (SZSE:002812) last week's 6.1% decline must have disappointed individual investors who have a significant stake

Key Insights

• The considerable ownership by individual investors in Yunnan Energy New Material indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 11 shareholders
• Insider ownership in Yunnan Energy New Material is 31%

Every investor in Yunnan Energy New Material Co., Ltd. (SZSE:002812) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 38% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 6.1% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 31% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Yunnan Energy New Material.

Check out our latest analysis for Yunnan Energy New Material

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

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 Yunnan Energy New Material. 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 Yunnan Energy New Material's historic earnings and revenue below, but keep in mind there's always more to the story.

Yunnan Energy New Material is not owned by hedge funds. The company's largest shareholder is Xiao Li, with ownership of 13%. In comparison, the second and third largest shareholders hold about 12% and 7.4% of the stock. Additionally, the company's CEO Xiaohua Li directly holds 7.1% of the total shares outstanding.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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¥8.2b worth of shares in the CN¥27b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yunnan Energy New Material. 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.

Private Company Ownership

We can see that Private Companies own 16%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Yunnan Energy New Material that you should be aware of.

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.