Key Insights

• Liaoning Dingjide Petrochemical's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Zaiming Zhang with a 53% stake
• 12% of Liaoning Dingjide Petrochemical is held by Institutions

If you want to know who really controls Liaoning Dingjide Petrochemical Co., Ltd. (SHSE:603255), then you'll have to look at the makeup of its share registry. With 72% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week's 15% gain.

In the chart below, we zoom in on the different ownership groups of Liaoning Dingjide Petrochemical.

What Does The Institutional Ownership Tell Us About Liaoning Dingjide Petrochemical?

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.

We can see that Liaoning Dingjide Petrochemical does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Liaoning Dingjide Petrochemical, (below). Of course, keep in mind that there are other factors to consider, too.

Liaoning Dingjide Petrochemical is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Liaoning Dingjide Petrochemical's case, its Top Key Executive, Zaiming Zhang, is the largest shareholder, holding 53% of shares outstanding. In comparison, the second and third largest shareholders hold about 16% and 2.1% of the stock. Interestingly, the second-largest shareholder, Weirong Xin is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

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. 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 Liaoning Dingjide Petrochemical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 that insiders own more than half the Liaoning Dingjide Petrochemical Co., Ltd. stock. This gives them a lot of power. Given it has a market cap of CN¥3.4b, that means they have CN¥2.4b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Liaoning Dingjide Petrochemical. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

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. For example, we've discovered 3 warning signs for Liaoning Dingjide Petrochemical (2 are concerning!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com