Key Insights

• Significant control over Dirui IndustrialLtd by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 54% of the business is held by the top 4 shareholders
• Insider ownership in Dirui IndustrialLtd is 14%

If you want to know who really controls Dirui Industrial Co.,Ltd. (SZSE:300396), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private equity firms with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

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

Let's take a closer look to see what the different types of shareholders can tell us about Dirui IndustrialLtd.

What Does The Institutional Ownership Tell Us About Dirui IndustrialLtd?

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.

As you can see, institutional investors have a fair amount of stake in Dirui IndustrialLtd. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Dirui IndustrialLtd's earnings history below. Of course, the future is what really matters.

Dirui IndustrialLtd is not owned by hedge funds. China Resources Capital Management Limited is currently the company's largest shareholder with 28% of shares outstanding. Guangdong Hengjian International Investment Co., Ltd. is the second largest shareholder owning 12% of common stock, and ICBC Credit Suisse Asset Management Co., Ltd. holds about 7.3% of the company stock.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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

Insider Ownership Of Dirui IndustrialLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Dirui Industrial Co.,Ltd.. It is very interesting to see that insiders have a meaningful CN¥1.1b stake in this CN¥7.6b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dirui IndustrialLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 40%, private equity firms could influence the Dirui IndustrialLtd board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

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. Case in point: We've spotted 1 warning sign for Dirui IndustrialLtd you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.