Individual investors invested in Jiangsu Flag Chemical Industry Co., Ltd. (SZSE:300575) up 11% last week, insiders too were rewarded

Key Insights

• Significant control over Jiangsu Flag Chemical Industry by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 5 shareholders own 51% of the company
• Insider ownership in Jiangsu Flag Chemical Industry is 36%

If you want to know who really controls Jiangsu Flag Chemical Industry Co., Ltd. (SZSE:300575), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 43% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s CN¥270m market cap gain, insiders too had a 36% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Jiangsu Flag Chemical Industry.

Check out our latest analysis for Jiangsu Flag Chemical Industry

What Does The Institutional Ownership Tell Us About Jiangsu Flag Chemical Industry?

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.

We can see that Jiangsu Flag Chemical Industry does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Jiangsu Flag Chemical Industry, (below). Of course, keep in mind that there are other factors to consider, too.

Jiangsu Flag Chemical Industry is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO YaoJun Wu with 29% of shares outstanding. With 7.3% and 5.8% of the shares outstanding respectively, Harvest Fund Management Co. Ltd. and Ji Zhang are the second and third largest shareholders. Interestingly, the third-largest shareholder, Ji Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Jiangsu Flag Chemical Industry

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.

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 information suggests that insiders maintain a significant holding in Jiangsu Flag Chemical Industry Co., Ltd.. Insiders have a CN¥1.0b stake in this CN¥2.8b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. 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 43% stake in Jiangsu Flag Chemical Industry. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 Jiangsu Flag Chemical Industry (1 is potentially serious) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.