Private companies are Zhejiang Wazam New Materials Co.,LTD.'s (SHSE:603186) biggest owners and were rewarded after market cap rose by CN¥354m last week

Key Insights

• Significant control over Zhejiang Wazam New MaterialsLTD by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 4 investors have a majority stake in the company with 50% ownership
• Institutional ownership in Zhejiang Wazam New MaterialsLTD is 19%

A look at the shareholders of Zhejiang Wazam New Materials Co.,LTD. (SHSE:603186) can tell us which group is most powerful. With 40% stake, private companies 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).

As a result, private companies collectively scored the highest last week as the company hit CN¥3.6b market cap following a 11% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Zhejiang Wazam New MaterialsLTD.

See our latest analysis for Zhejiang Wazam New MaterialsLTD

What Does The Institutional Ownership Tell Us About Zhejiang Wazam New MaterialsLTD?

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.

Zhejiang Wazam New MaterialsLTD 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. 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 Zhejiang Wazam New MaterialsLTD's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhejiang Wazam New MaterialsLTD. Holley Group Co., Ltd is currently the company's largest shareholder with 40% of shares outstanding. For context, the second largest shareholder holds about 3.9% of the shares outstanding, followed by an ownership of 3.5% by the third-largest shareholder. Furthermore, CEO Jiang Cheng Guo is the owner of 0.8% of the company's shares.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Zhejiang Wazam New MaterialsLTD

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.

We can report that insiders do own shares in Zhejiang Wazam New Materials Co.,LTD.. It has a market capitalization of just CN¥3.6b, and insiders have CN¥69m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Zhejiang Wazam New MaterialsLTD. 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 40%, 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 Zhejiang Wazam New MaterialsLTD better, we need to consider many other factors. For example, we've discovered 2 warning signs for Zhejiang Wazam New MaterialsLTD (1 is potentially serious!) that you should be aware of before investing here.

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.

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