Zhejiang Zhongke Magnetic Industry Co., Ltd.'s (SZSE:301141) largest shareholder, CEO Zhongping Wu sees holdings value fall by 8.2% following recent drop

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
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Zhejiang Zhongke Magnetic Industry Co., Ltd. (SZSE:301141) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 64% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 8.2% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of Zhejiang Zhongke Magnetic Industry, beginning with the chart below.

See our latest analysis for Zhejiang Zhongke Magnetic Industry

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

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.

Zhejiang Zhongke Magnetic Industry already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhejiang Zhongke Magnetic Industry's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhejiang Zhongke Magnetic Industry. The company's CEO Zhongping Wu is the largest shareholder with 33% of shares outstanding. With 16% and 15% of the shares outstanding respectively, Shuangping Wu and Weiping Wu are the second and third largest shareholders. Interestingly, the third-largest shareholder, Weiping Wu is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Zhejiang Zhongke Magnetic Industry

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Zhejiang Zhongke Magnetic Industry Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥2.8b stake in this CN¥4.4b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Zhejiang Zhongke Magnetic Industry. 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

Our data indicates that Private Companies hold 7.2%, of the company's shares. 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. Case in point: We've spotted 5 warning signs for Zhejiang Zhongke Magnetic Industry you should be aware of, and 3 of them make us uncomfortable.

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.