Rongxin Education and Culture Industry Development Co., Ltd.'s (SZSE:301231) last week's 17% decline must have disappointed retail investors who have a significant stake

Key Insights

• Rongxin Education and Culture Industry Development's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 11 shareholders own 51% of the company
• Insider ownership in Rongxin Education and Culture Industry Development is 30%

If you want to know who really controls Rongxin Education and Culture Industry Development Co., Ltd. (SZSE:301231), then you'll have to look at the makeup of its share registry. With 45% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 30% came under pressure after market cap dropped to CN¥1.6b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Rongxin Education and Culture Industry Development.

See our latest analysis for Rongxin Education and Culture Industry Development

What Does The Institutional Ownership Tell Us About Rongxin Education and Culture Industry Development?

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 Rongxin Education and Culture Industry Development. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Rongxin Education and Culture Industry Development's earnings history below. Of course, the future is what really matters.

Rongxin Education and Culture Industry Development is not owned by hedge funds. The company's CEO Yihua Wang is the largest shareholder with 26% of shares outstanding. Xi'an Lelequ Investment Management Limited Partnership Enterprise is the second largest shareholder owning 6.2% of common stock, and Hongbing Yan holds about 4.6% of the company stock. Interestingly, the third-largest shareholder, Hongbing Yan is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 11 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over 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 Rongxin Education and Culture Industry Development

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own a reasonable proportion of Rongxin Education and Culture Industry Development Co., Ltd.. Insiders own CN¥482m worth of shares in the CN¥1.6b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Rongxin Education and Culture Industry Development. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 6.2%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Rongxin Education and Culture Industry Development better, we need to consider many other factors. Be aware that Rongxin Education and Culture Industry Development is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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.