Changzhou Tronly New Electronic Materials Co., Ltd.'s (SZSE:300429) market cap dropped CN¥646m last week; Individual investors bore the brunt

Key Insights

• Significant control over Changzhou Tronly New Electronic Materials by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 41% ownership
• Insider ownership in Changzhou Tronly New Electronic Materials is 36%

To get a sense of who is truly in control of Changzhou Tronly New Electronic Materials Co., Ltd. (SZSE:300429), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 59% 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).

While insiders who own 36% came under pressure after market cap dropped to CN¥6.8b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Changzhou Tronly New Electronic Materials.

See our latest analysis for Changzhou Tronly New Electronic Materials

What Does The Institutional Ownership Tell Us About Changzhou Tronly New Electronic Materials?

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.

Since institutions own only a small portion of Changzhou Tronly New Electronic Materials, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Changzhou Tronly New Electronic Materials. Xiaochun Qian is currently the largest shareholder, with 20% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 3.0% by the third-largest shareholder.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 Changzhou Tronly New Electronic Materials

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.

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 Changzhou Tronly New Electronic Materials Co., Ltd.. Insiders have a CN¥2.4b stake in this CN¥6.8b business. 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 59% of Changzhou Tronly New Electronic Materials. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. For example, we've discovered 3 warning signs for Changzhou Tronly New Electronic Materials (2 are significant!) that you should be aware of before investing here.

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.