Retail investors among Guangzhou Jointas Chemical Co., Ltd.'s (SZSE:002909) largest stockholders and were hit after last week's 12% price drop

Key Insights

• The considerable ownership by retail investors in Guangzhou Jointas Chemical indicates that they collectively have a greater say in management and business strategy
• A total of 19 investors have a majority stake in the company with 50% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Guangzhou Jointas Chemical Co., Ltd. (SZSE:002909) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 48% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 12% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Guangzhou Jointas Chemical.

View our latest analysis for Guangzhou Jointas Chemical

What Does The Institutional Ownership Tell Us About Guangzhou Jointas Chemical?

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.

We can see that Guangzhou Jointas Chemical 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 Guangzhou Jointas Chemical'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 Guangzhou Jointas Chemical. Looking at our data, we can see that the largest shareholder is Guangzhou Antas Chemical Co. Ltd with 38% of shares outstanding. For context, the second largest shareholder holds about 2.1% of the shares outstanding, followed by an ownership of 1.5% by the third-largest shareholder. Zhen Fu Zou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 19 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Guangzhou Jointas Chemical

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own some shares in Guangzhou Jointas Chemical Co., Ltd.. It has a market capitalization of just CN¥1.8b, and insiders have CN¥74m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 48% stake in Guangzhou Jointas Chemical. 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 Company Ownership

It seems that Private Companies own 38%, of the Guangzhou Jointas Chemical stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Guangzhou Jointas Chemical (of which 2 are significant!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.