Key Insights

• Significant control over Zhejiang RIFA Precision Machinery by individual investors implies that the general public has more power to influence management and governance-related decisions
• 43% of the business is held by the top 13 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Zhejiang RIFA Precision Machinery Co., Ltd. (SZSE:002520), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 57% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, individual investors as a group endured the highest losses last week after market cap fell by CN¥456m.

Let's delve deeper into each type of owner of Zhejiang RIFA Precision Machinery, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Zhejiang RIFA Precision Machinery?

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.

Zhejiang RIFA Precision Machinery already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 RIFA Precision Machinery'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 RIFA Precision Machinery. Zhejiang Rifa Holding Group Co.,Ltd is currently the company's largest shareholder with 27% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.5% and 3.4% of the stock.

Our studies suggest that the top 13 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang RIFA Precision Machinery

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.

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.

We can see that insiders own shares in Zhejiang RIFA Precision Machinery Co., Ltd.. It has a market capitalization of just CN¥4.2b, and insiders have CN¥343m worth of shares, in their own names. It is good to see some investment by insiders, 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 57% of Zhejiang RIFA Precision Machinery shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 27%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang RIFA Precision Machinery better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Zhejiang RIFA Precision Machinery (including 2 which don't sit too well with us) .

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.