Individual investors invested in Yangzhou Chenhua New Material Co., Ltd. (SZSE:300610) copped the brunt of last week's CN¥250m market cap decline

Key Insights

• The considerable ownership by individual investors in Yangzhou Chenhua New Material indicates that they collectively have a greater say in management and business strategy
• 43% of the business is held by the top 25 shareholders
• 40% of Yangzhou Chenhua New Material is held by insiders

A look at the shareholders of Yangzhou Chenhua New Material Co., Ltd. (SZSE:300610) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 11% price drop, insiders with their 40% also suffered.

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

View our latest analysis for Yangzhou Chenhua New Material

What Does The Institutional Ownership Tell Us About Yangzhou Chenhua 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.

Since institutions own only a small portion of Yangzhou Chenhua New Material, 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 business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Yangzhou Chenhua New Material. With a 24% stake, CEO Zi Zhou Yu is the largest shareholder. In comparison, the second and third largest shareholders hold about 4.8% and 4.0% of the stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Yangzhou Chenhua New Material

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Yangzhou Chenhua New Material Co., Ltd.. Insiders have a CN¥859m stake in this CN¥2.1b 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 -- including retail investors -- own 57% of Yangzhou Chenhua New Material. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Yangzhou Chenhua New Material 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.