Chongqing Iron & Steel Company Limited's (HKG:1053) last week's 10% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Chongqing Iron & Steel indicates that they collectively have a greater say in management and business strategy
• 48% of the business is held by the top 25 shareholders
• Institutional ownership in Chongqing Iron & Steel is 12%

Every investor in Chongqing Iron & Steel Company Limited (HKG:1053) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, retail investors endured the biggest losses as the stock fell by 10%.

Let's take a closer look to see what the different types of shareholders can tell us about Chongqing Iron & Steel.

View our latest analysis for Chongqing Iron & Steel

What Does The Institutional Ownership Tell Us About Chongqing Iron & Steel?

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.

Chongqing Iron & Steel 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 Chongqing Iron & Steel's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Chongqing Iron & Steel. Looking at our data, we can see that the largest shareholder is Chongqing Changshou Iron & Steel Company Limited with 24% of shares outstanding. With 4.8% and 3.2% of the shares outstanding respectively, Chongqing Qianxin Group Co., Ltd. and Chongqing Rural Commercial Bank Co., Ltd., Asset Management Arm are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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

Insider Ownership Of Chongqing Iron & Steel

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Chongqing Iron & Steel Company Limited in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. Keep in mind that it's a big company, and the insiders own HK$10m 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, mostly comprising of individual investors, collectively holds 52% of Chongqing Iron & Steel shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 36%, of the shares on issue. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Chongqing Iron & Steel is showing 1 warning sign in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.