Henan Jindan Lactic Acid Technology Co.,Ltd. (SZSE:300829) adds CN¥365m in market cap and insiders have a 45% stake in that gain

Key Insights

• Insiders appear to have a vested interest in Henan Jindan Lactic Acid TechnologyLtd's growth, as seen by their sizeable ownership
• 52% of the business is held by the top 6 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Henan Jindan Lactic Acid Technology Co.,Ltd. (SZSE:300829), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 45% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by CN¥365m last week.

Let's delve deeper into each type of owner of Henan Jindan Lactic Acid TechnologyLtd, beginning with the chart below.

View our latest analysis for Henan Jindan Lactic Acid TechnologyLtd

What Does The Institutional Ownership Tell Us About Henan Jindan Lactic Acid TechnologyLtd?

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 Henan Jindan Lactic Acid TechnologyLtd, 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. So if the company itself can improve over time, we may well see more institutional buyers in the future. 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 Henan Jindan Lactic Acid TechnologyLtd. Looking at our data, we can see that the largest shareholder is Pengdan Zhang with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.2% and 5.1%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Henan Jindan Lactic Acid TechnologyLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Our information suggests that insiders maintain a significant holding in Henan Jindan Lactic Acid Technology Co.,Ltd.. Insiders have a CN¥1.2b stake in this CN¥2.7b 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

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Henan Jindan Lactic Acid TechnologyLtd. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 11% stake in Henan Jindan Lactic Acid TechnologyLtd. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Henan Jindan Lactic Acid TechnologyLtd (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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.