China Fortune Land Development Co., Ltd.'s (SHSE:600340) market cap touched CN¥11b last week, benefiting both retail investors who own 56% as well as institutions

Key Insights

• Significant control over China Fortune Land Development by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 44% of the company
• Institutional ownership in China Fortune Land Development is 28%

To get a sense of who is truly in control of China Fortune Land Development Co., Ltd. (SHSE:600340), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 4.6% increase in the stock price last week, retail investors profited the most, but institutions who own 28% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of China Fortune Land Development.

See our latest analysis for China Fortune Land Development

What Does The Institutional Ownership Tell Us About China Fortune Land 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 China Fortune Land Development. 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. 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 China Fortune Land Development's historic earnings and revenue below, but keep in mind there's always more to the story.

China Fortune Land Development is not owned by hedge funds. Our data shows that Beijing Oriental UnionPay Investment Management Co., Ltd. is the largest shareholder with 12% of shares outstanding. With 11% and 8.4% of the shares outstanding respectively, Ping An of China Asset Management (Hong Kong) Company Limited and Ping An Asset Management Co., Ltd. are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 China Fortune Land Development

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 information suggests that China Fortune Land Development Co., Ltd. insiders own under 1% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CN¥100m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 56% stake in China Fortune Land Development, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 14%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand China Fortune Land Development better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for China Fortune Land Development you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.