Rianlon Corporation's (SZSE:300596) last week's 5.4% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Rianlon indicates that they collectively have a greater say in management and business strategy
• A total of 17 investors have a majority stake in the company with 50% ownership
• 14% of Rianlon is held by insiders

If you want to know who really controls Rianlon Corporation (SZSE:300596), 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 48% to be precise, is retail investors. 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 5.4% decline in share price, retail investors suffered the most losses.

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

Check out our latest analysis for Rianlon

What Does The Institutional Ownership Tell Us About Rianlon?

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.

We can see that Rianlon 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Rianlon's earnings history below. Of course, the future is what really matters.

Rianlon is not owned by hedge funds. Tianjin Li'anlong Science And Technology Group Co., Ltd. is currently the company's largest shareholder with 14% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 6.9% by the third-largest shareholder. Hai Ping Li, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 17 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Rianlon

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.

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 Rianlon Corporation. Insiders have a CN¥966m stake in this CN¥7.0b 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, who are usually individual investors, hold a 48% stake in Rianlon. 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

Our data indicates that Private Companies hold 25%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Rianlon better, we need to consider many other factors. Take risks for example - Rianlon has 2 warning signs we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.