Key Insights

• Red Avenue New Materials Group's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Ning Zhang with a 64% stake
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Red Avenue New Materials Group Co., Ltd. (SHSE:603650), it is important to understand the ownership structure of the business. With 64% 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).

And last week, insiders endured the biggest losses as the stock fell by 6.4%.

Let's take a closer look to see what the different types of shareholders can tell us about Red Avenue New Materials Group.

Check out our latest analysis for Red Avenue New Materials Group

What Does The Institutional Ownership Tell Us About Red Avenue New Materials Group?

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 Red Avenue New Materials Group. 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 Red Avenue New Materials Group, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Red Avenue New Materials Group. Looking at our data, we can see that the largest shareholder is Ning Zhang with 64% of shares outstanding. This implies that they have majority interest control of the future of the company. Zhoushan Yutong Venture Capital Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 5.7% of common stock, and Shaanxi Coal and Chemical Industry Group Co.,Ltd. holds about 2.4% of the company stock.

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 Red Avenue New Materials Group

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems that insiders own more than half the Red Avenue New Materials Group Co., Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful CN¥14b stake in this CN¥22b business. 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

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Red Avenue New Materials Group. 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.

Private Company Ownership

We can see that Private Companies own 8.1%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Red Avenue New Materials Group better, we need to consider many other factors. Be aware that Red Avenue New Materials Group is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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.