Guangdong Modern High-tech Fiber Co., Ltd (SZSE:300876) adds CN¥258m in market cap and insiders have a 64% stake in that gain

Key Insights

• Guangdong Modern High-tech Fiber's significant insider ownership suggests inherent interests in company's expansion
• Qinghai Guo owns 64% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Guangdong Modern High-tech Fiber Co., Ltd (SZSE:300876), then you'll have to look at the makeup of its share registry. With 64% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders scored the highest last week as the company hit CN¥2.7b market cap following a 11% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Guangdong Modern High-tech Fiber.

View our latest analysis for Guangdong Modern High-tech Fiber

What Does The Institutional Ownership Tell Us About Guangdong Modern High-tech Fiber?

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.

Institutions have a very small stake in Guangdong Modern High-tech Fiber. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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.

We note that hedge funds don't have a meaningful investment in Guangdong Modern High-tech Fiber. Qinghai Guo is currently the largest shareholder, with 64% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.8% and 0.5% of the shares outstanding respectively, Jieyang Zizai Investment Management Partnership Enterprise (Limited Partnership) and Gfund Management Co., Ltd. are the second and third largest shareholders.

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

Insider Ownership Of Guangdong Modern High-tech Fiber

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. 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.

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 most recent data indicates that insiders own the majority of Guangdong Modern High-tech Fiber Co., Ltd. This means they can collectively make decisions for the company. That means they own CN¥1.7b worth of shares in the CN¥2.7b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 31% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Guangdong Modern High-tech Fiber. 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

We can see that Private Companies own 3.8%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Guangdong Modern High-tech Fiber (at least 3 which are potentially serious) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.