Insiders are the top stockholders in Xinjiang Haoyuan Natural Gas Co., Ltd. (SZSE:002700), and the recent 8.4% drop might have disappointed them

Key Insights

• Significant insider control over Xinjiang Haoyuan Natural Gas implies vested interests in company growth
• The top 3 shareholders own 50% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Xinjiang Haoyuan Natural Gas Co., Ltd. (SZSE:002700), it is important to understand the ownership structure of the business. With 55% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥4.3b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Xinjiang Haoyuan Natural Gas.

View our latest analysis for Xinjiang Haoyuan Natural Gas

What Does The Lack Of Institutional Ownership Tell Us About Xinjiang Haoyuan Natural Gas?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Xinjiang Haoyuan Natural Gas' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Xinjiang Haoyuan Natural Gas. The company's largest shareholder is Menglong Li, with ownership of 24%. In comparison, the second and third largest shareholders hold about 23% and 3.1% of the stock.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Xinjiang Haoyuan Natural Gas

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 information suggests that insiders own more than half of Xinjiang Haoyuan Natural Gas Co., Ltd.. This gives them effective control of the company. So they have a CN¥2.3b stake in this CN¥4.3b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinjiang Haoyuan Natural Gas. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Xinjiang Haoyuan Natural Gas better, we need to consider many other factors. Take risks for example - Xinjiang Haoyuan Natural Gas has 2 warning signs (and 1 which shouldn't be ignored) we think 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.