Retail investors among Zhong Fu Tong Group Co., Ltd.'s (SZSE:300560) largest stockholders and were hit after last week's 10% price drop

Key Insights

• Zhong Fu Tong Group's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 5 shareholders own 50% of the company
• 27% of Zhong Fu Tong Group is held by insiders

To get a sense of who is truly in control of Zhong Fu Tong Group Co., Ltd. (SZSE:300560), it is important to understand the ownership structure of the business. With 44% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 10% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 27% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Zhong Fu Tong Group.

See our latest analysis for Zhong Fu Tong Group

What Does The Institutional Ownership Tell Us About Zhong Fu Tong Group?

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.

Zhong Fu Tong Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhong Fu Tong Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Zhong Fu Tong Group. Looking at our data, we can see that the largest shareholder is Rong Jie Chen with 25% of shares outstanding. Fujian Rongjia Technology Co., Ltd. is the second largest shareholder owning 12% of common stock, and Jinan Tiefu Investment Partnership Enterprise (Limited Partnership) holds about 6.0% of the company stock.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhong Fu Tong Group

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 information suggests that insiders maintain a significant holding in Zhong Fu Tong Group Co., Ltd.. Insiders have a CN¥675m stake in this CN¥2.5b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. 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 21%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Zhong Fu Tong Group is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.