Private companies invested in Hangzhou First Applied Material Co., Ltd. (SHSE:603806) copped the brunt of last week's CN¥1.4b market cap decline

Key Insights

• The considerable ownership by private companies in Hangzhou First Applied Material indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 62% ownership
• Insider ownership in Hangzhou First Applied Material is 13%

If you want to know who really controls Hangzhou First Applied Material Co., Ltd. (SHSE:603806), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 50% 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 3.5% decline in share price, private companies suffered the most losses.

Let's delve deeper into each type of owner of Hangzhou First Applied Material, beginning with the chart below.

View our latest analysis for Hangzhou First Applied Material

What Does The Institutional Ownership Tell Us About Hangzhou First Applied Material?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Hangzhou First Applied Material. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hangzhou First Applied Material's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Hangzhou First Applied Material. Looking at our data, we can see that the largest shareholder is Hangzhou First Technology Group Co., Ltd. with 49% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 1.4% by the third-largest shareholder. Jianhua Lin, who is the second-largest shareholder, also happens to hold the title of President.

To make our study more interesting, we found that the top 2 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Hangzhou First Applied Material

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.

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 maintain a significant holding in Hangzhou First Applied Material Co., Ltd.. Insiders own CN¥5.0b worth of shares in the CN¥37b company. That's quite meaningful. 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 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hangzhou First Applied Material. 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 50%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Hangzhou First Applied Material has 1 warning sign we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.