China Dongxiang (Group) Co., Ltd. (HKG:3818) Top Key Executive Yihong Chen's holdings dropped 16% in value as a result of the recent pullback

Key Insights

• Insiders appear to have a vested interest in China Dongxiang (Group)'s growth, as seen by their sizeable ownership
• The top 5 shareholders own 51% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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Every investor in China Dongxiang (Group) Co., Ltd. (HKG:3818) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to HK$1.9b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about China Dongxiang (Group).

Check out our latest analysis for China Dongxiang (Group)

What Does The Institutional Ownership Tell Us About China Dongxiang (Group)?

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.

We can see that China Dongxiang (Group) does have institutional investors; and they hold a good portion of the company's stock. 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. 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 China Dongxiang (Group), (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 China Dongxiang (Group). Our data suggests that Yihong Chen, who is also the company's Top Key Executive, holds the most number of shares at 32%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 11% and 2.8% of the shares outstanding respectively, Chen Chen and Zhiyong Zhang are the second and third largest shareholders. Interestingly, the second-largest shareholder, Chen Chen is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of China Dongxiang (Group)

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

It seems insiders own a significant proportion of China Dongxiang (Group) Co., Ltd.. Insiders have a HK$895m stake in this HK$1.9b 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

With a 46% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Dongxiang (Group). 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for China Dongxiang (Group) 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.