Recent 4.7% pullback would hurt Nanjing COSMOS Chemical Co., Ltd. (SZSE:300856) insiders

Key Insights

• Significant insider control over Nanjing COSMOS Chemical implies vested interests in company growth
• 61% of the company is held by a single shareholder (Xuming Zhou)
• 15% of Nanjing COSMOS Chemical is held by Institutions

A look at the shareholders of Nanjing COSMOS Chemical Co., Ltd. (SZSE:300856) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 62% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders as a group endured the highest losses after market cap fell by CN¥492m.

In the chart below, we zoom in on the different ownership groups of Nanjing COSMOS Chemical.

Check out our latest analysis for Nanjing COSMOS Chemical

What Does The Institutional Ownership Tell Us About Nanjing COSMOS Chemical?

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.

We can see that Nanjing COSMOS Chemical does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Nanjing COSMOS Chemical, (below). Of course, keep in mind that there are other factors to consider, too.

Nanjing COSMOS Chemical is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Xuming Zhou with 61% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.5% and 2.4% of the shares outstanding respectively, Fullgoal Fund Management Co. Ltd. and Nanjing Ketou Enterprise Management Center (Limited Partnership) are the second and third largest shareholders.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Nanjing COSMOS Chemical

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the Nanjing COSMOS Chemical Co., Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful CN¥6.3b stake in this CN¥10b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Nanjing COSMOS Chemical. 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 Company Ownership

We can see that Private Companies own 3.3%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nanjing COSMOS Chemical better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Nanjing COSMOS Chemical you should be aware of, and 1 of them is a bit concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com