Individual investors invested in Changzhou Fusion New Material Co., Ltd. (SHSE:688503) copped the brunt of last week's CN¥389m market cap decline

Key Insights

• The considerable ownership by individual investors in Changzhou Fusion New Material indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 48% ownership
• Insiders own 25% of Changzhou Fusion New Material

To get a sense of who is truly in control of Changzhou Fusion New Material Co., Ltd. (SHSE:688503), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 52% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 3.3% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 25% stock also took a hit.

Let's delve deeper into each type of owner of Changzhou Fusion New Material, beginning with the chart below.

See our latest analysis for Changzhou Fusion New Material

What Does The Institutional Ownership Tell Us About Changzhou Fusion New Material?

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.

Changzhou Fusion New Material 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Changzhou Fusion New Material, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Changzhou Fusion New Material. With a 12% stake, CEO Haidong Liu is the largest shareholder. Yaomin Chen is the second largest shareholder owning 8.4% of common stock, and Ningbo Meishan Bonded Port Area Pengji Enterprise Management Partnership Enterprise (Limited Partner holds about 7.1% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Changzhou Fusion New Material

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

It seems insiders own a significant proportion of Changzhou Fusion New Material Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥2.8b stake in this CN¥11b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public -- including retail investors -- own 52% of Changzhou Fusion New Material. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 8.4%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 - Changzhou Fusion New Material has 4 warning signs (and 1 which is concerning) we think you should know about.

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.