Key Insights

• Insiders appear to have a vested interest in Zhejiang Taihua New MaterialLtd's growth, as seen by their sizeable ownership
• 55% of the business is held by the top 2 shareholders
• Institutional ownership in Zhejiang Taihua New MaterialLtd is 16%

Every investor in Zhejiang Taihua New Material Co.,Ltd (SHSE:603055) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 70% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 5.0% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Zhejiang Taihua New MaterialLtd.

Check out our latest analysis for Zhejiang Taihua New MaterialLtd

What Does The Institutional Ownership Tell Us About Zhejiang Taihua New MaterialLtd?

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.

As you can see, institutional investors have a fair amount of stake in Zhejiang Taihua New MaterialLtd. 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. 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 Zhejiang Taihua New MaterialLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Zhejiang Taihua New MaterialLtd. Xiu You Shi is currently the company's largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 25% and 15%, of the shares outstanding, respectively. Wei Feng Shen, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Zhejiang Taihua New MaterialLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Zhejiang Taihua New Material Co.,Ltd. This gives them effective control of the company. Given it has a market cap of CN¥8.5b, that means insiders have a whopping CN¥6.0b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. 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. For instance, we've identified 3 warning signs for Zhejiang Taihua New MaterialLtd (2 are significant) that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.