Painful week for public companies invested in Xinjiang Daqo New Energy Co.,Ltd. (SHSE:688303) after 9.1% drop, institutions also suffered losses

Key Insights

• The considerable ownership by public companies in Xinjiang Daqo New EnergyLtd indicates that they collectively have a greater say in management and business strategy
• Daqo New Energy Corp. owns 73% of the company
• Institutional ownership in Xinjiang Daqo New EnergyLtd is 12%

To get a sense of who is truly in control of Xinjiang Daqo New Energy Co.,Ltd. (SHSE:688303), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are public companies with 73% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 12% shares weren’t spared from last week’s CN¥5.0b market cap drop, public companies as a group suffered the maximum losses

Let's delve deeper into each type of owner of Xinjiang Daqo New EnergyLtd, beginning with the chart below.

Check out our latest analysis for Xinjiang Daqo New EnergyLtd

What Does The Institutional Ownership Tell Us About Xinjiang Daqo New EnergyLtd?

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 Xinjiang Daqo New EnergyLtd. 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. 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 Xinjiang Daqo New EnergyLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Xinjiang Daqo New EnergyLtd. Looking at our data, we can see that the largest shareholder is Daqo New Energy Corp. with 73% of shares outstanding. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 2.2% and 1.4%, of the shares outstanding, respectively. Additionally, the company's CEO Xiang Xu directly holds 0.9% of the total shares outstanding.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Xinjiang Daqo New EnergyLtd

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in Xinjiang Daqo New Energy Co.,Ltd.. The insiders have a meaningful stake worth CN¥1.7b. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinjiang Daqo New EnergyLtd. 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.

Public Company Ownership

We can see that public companies hold 73% of the Xinjiang Daqo New EnergyLtd shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Xinjiang Daqo New EnergyLtd (of which 1 shouldn't be ignored!) you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com