Key Insights

• Significant control over Zhe Jiang Li Zi Yuan FoodLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 2 investors have a majority stake in the company with 54% ownership
• Insiders own 30% of Zhe Jiang Li Zi Yuan FoodLtd

Every investor in Zhe Jiang Li Zi Yuan Food Co.,Ltd. (SHSE:605337) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 35% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 30% shares weren't spared from last week's CN¥414m market cap drop, private companies as a group suffered the maximum losses

Let's delve deeper into each type of owner of Zhe Jiang Li Zi Yuan FoodLtd, beginning with the chart below.

See our latest analysis for Zhe Jiang Li Zi Yuan FoodLtd

What Does The Institutional Ownership Tell Us About Zhe Jiang Li Zi Yuan FoodLtd?

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.

As you can see, institutional investors have a fair amount of stake in Zhe Jiang Li Zi Yuan FoodLtd. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Zhe Jiang Li Zi Yuan FoodLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Zhe Jiang Li Zi Yuan FoodLtd. The company's largest shareholder is Zhejiang Lishui Shuidiquan Investment Development Co., Ltd., with ownership of 32%. With 22% and 5.3% of the shares outstanding respectively, Guoping Li and Xubin Wang are the second and third largest shareholders. Xubin Wang, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Wenxiu Zhu is the owner of 0.6% of the company's shares.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Zhe Jiang Li Zi Yuan FoodLtd

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Zhe Jiang Li Zi Yuan Food Co.,Ltd.. It has a market capitalization of just CN¥5.3b, and insiders have CN¥1.6b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 20% 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

We can see that Private Companies own 35%, 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Zhe Jiang Li Zi Yuan FoodLtd , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.