Jade Bird Fire Co., Ltd.'s (SZSE:002960) market cap dropped CN¥763m last week; Retail investors bore the brunt

Key Insights

• Significant control over Jade Bird Fire by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 53% of the company
• 23% of Jade Bird Fire is held by insiders

Every investor in Jade Bird Fire Co., Ltd. (SZSE:002960) should be aware of the most powerful shareholder groups. With 33% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 5.7% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Jade Bird Fire.

Check out our latest analysis for Jade Bird Fire

What Does The Institutional Ownership Tell Us About Jade Bird Fire?

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 Jade Bird Fire. 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. 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 Jade Bird Fire's historic earnings and revenue below, but keep in mind there's always more to the story.

Jade Bird Fire is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Beijing Beida Jade Bird Universal Sci-Tech Company Limited with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 18% and 8.7%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 53% 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 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 Jade Bird Fire

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders maintain a significant holding in Jade Bird Fire Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥2.1b stake in this CN¥9.4b 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 33% stake in the company, and hence can't easily be ignored. 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 32% of the Jade Bird Fire shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Jade Bird Fire .

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.

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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