Xinjiang Tianfu Energy Co., Ltd.'s (SHSE:600509) stock price dropped 3.8% last week; retail investors would not be happy

Key Insights

• Significant control over Xinjiang Tianfu Energy by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 19 investors have a majority stake in the company with 50% ownership
• Institutions own 12% of Xinjiang Tianfu Energy

A look at the shareholders of Xinjiang Tianfu Energy Co., Ltd. (SHSE:600509) can tell us which group is most powerful. The group holding the most number of shares in the company, around 48% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 3.8% decline in share price, retail investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Xinjiang Tianfu Energy.

Check out our latest analysis for Xinjiang Tianfu Energy

What Does The Institutional Ownership Tell Us About Xinjiang Tianfu Energy?

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.

We can see that Xinjiang Tianfu Energy does have institutional investors; and they hold a good portion of the company's stock. 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 Xinjiang Tianfu Energy, (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 Xinjiang Tianfu Energy. China New Electric Power Group Co., Ltd. is currently the largest shareholder, with 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.5% and 2.0%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 19 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Xinjiang Tianfu Energy

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own less than 1% of Xinjiang Tianfu Energy Co., Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. Keep in mind that it's a big company, and the insiders own CN¥46k worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 48% stake in the company, and hence can't easily be ignored. 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

It seems that Private Companies own 40%, of the Xinjiang Tianfu Energy stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Xinjiang Tianfu Energy better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Xinjiang Tianfu Energy (including 1 which is significant) .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.