Shandong Dongyue Organosilicon Materials Co., Ltd.'s (SZSE:300821) market cap surged CN¥1.4b last week, public companies who have a lot riding on the company were rewarded

Key Insights

• Significant control over Shandong Dongyue Organosilicon Materials by public companies implies that the general public has more power to influence management and governance-related decisions
• 52% of the business is held by the top 2 shareholders
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Shandong Dongyue Organosilicon Materials Co., Ltd. (SZSE:300821), it is important to understand the ownership structure of the business. With 44% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies were the biggest beneficiaries of last week’s 15% gain.

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

See our latest analysis for Shandong Dongyue Organosilicon Materials

What Does The Institutional Ownership Tell Us About Shandong Dongyue Organosilicon Materials?

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.

As you can see, institutional investors have a fair amount of stake in Shandong Dongyue Organosilicon Materials. 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 Shandong Dongyue Organosilicon Materials' historic earnings and revenue below, but keep in mind there's always more to the story.

Shandong Dongyue Organosilicon Materials is not owned by hedge funds. Dongyue Group Limited is currently the company's largest shareholder with 44% of shares outstanding. Zibo Xiaoxi Business Management Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 7.8% of common stock, and China Minsheng Banking Corp. Ltd., Asset Management Arm holds about 5.0% of the company stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shandong Dongyue Organosilicon Materials

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 data suggests that insiders own under 1% of Shandong Dongyue Organosilicon Materials Co., Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥3.2m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Shandong Dongyue Organosilicon Materials. 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 9.2%, of the Shandong Dongyue Organosilicon Materials stock. 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.

Public Company Ownership

Public companies currently own 44% of Shandong Dongyue Organosilicon Materials stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shandong Dongyue Organosilicon Materials better, we need to consider many other factors. For example, we've discovered 1 warning sign for Shandong Dongyue Organosilicon Materials that you should be aware of before investing here.

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.