Key Insights

• Significant insider control over Red Avenue New Materials Group implies vested interests in company growth
• The largest shareholder of the company is Ning Zhang with a 62% stake
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of Red Avenue New Materials Group Co., Ltd. (SHSE:603650) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 63% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders scored the highest last week as the company hit CN¥17b market cap following a 5.6% gain in the stock.

Let's delve deeper into each type of owner of Red Avenue New Materials Group, beginning with the chart below.

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

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.

Red Avenue New Materials Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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.

Red Avenue New Materials Group is not owned by hedge funds. Ning Zhang is currently the largest shareholder, with 62% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 5.0% and 3.0% of the shares outstanding respectively, Zhoushan Yutong Venture Capital Partnership Enterprise (Limited Partnership) and Shaanxi Coal and Chemical Industry Group Co.,Ltd. are the second and third largest shareholders.

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 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 Red Avenue New Materials Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own the majority of Red Avenue New Materials Group Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥17b, that means insiders have a whopping CN¥11b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Red Avenue New Materials Group. 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.

Private Company Ownership

Our data indicates that Private Companies hold 8.1%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Red Avenue New Materials Group 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.