Insiders are the top stockholders in Zhejiang Zhongke Magnetic Industry Co., Ltd. (SZSE:301141), and the recent 13% drop might have disappointed them

Key Insights

• Zhejiang Zhongke Magnetic Industry's significant insider ownership suggests inherent interests in company's expansion
• A total of 3 investors have a majority stake in the company with 64% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Zhejiang Zhongke Magnetic Industry Co., Ltd. (SZSE:301141) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 64% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥3.7b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Zhejiang Zhongke Magnetic Industry.

See our latest analysis for Zhejiang Zhongke Magnetic Industry

What Does The Institutional Ownership Tell Us About Zhejiang Zhongke Magnetic Industry?

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 Zhejiang Zhongke Magnetic Industry. 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 Zhejiang Zhongke Magnetic Industry, (below). Of course, keep in mind that there are other factors to consider, too.

Zhejiang Zhongke Magnetic Industry is not owned by hedge funds. Our data shows that Zhongping Wu is the largest shareholder with 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 15%, of the shares outstanding, respectively. Weiping Wu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang Zhongke Magnetic Industry

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders own more than half of Zhejiang Zhongke Magnetic Industry Co., Ltd.. This gives them effective control of the company. So they have a CN¥2.4b stake in this CN¥3.7b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Zhongke Magnetic Industry. 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 8.2%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Zhejiang Zhongke Magnetic Industry (of which 1 is significant!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.