Key Insights

• Significant control over Kunming Chuan Jin Nuo Chemical by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 24 investors have a majority stake in the company with 49% ownership
• Insiders own 31% of Kunming Chuan Jin Nuo Chemical

To get a sense of who is truly in control of Kunming Chuan Jin Nuo Chemical Co., Ltd. (SZSE:300505), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 51% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 11% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 31% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Kunming Chuan Jin Nuo Chemical.

What Does The Institutional Ownership Tell Us About Kunming Chuan Jin Nuo Chemical?

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 Kunming Chuan Jin Nuo Chemical. 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. 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 Kunming Chuan Jin Nuo Chemical's earnings history below. Of course, the future is what really matters.

Kunming Chuan Jin Nuo Chemical 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 Kunming Chuan Jin Nuo Chemical's case, its Secretary, Meng Liu, is the largest shareholder, holding 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.6% and 3.6%, of the shares outstanding, respectively. Furthermore, CEO Jia Gui Wei is the owner of 1.5% of the company's shares.

On studying our ownership data, we found that 24 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Kunming Chuan Jin Nuo Chemical

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

It seems insiders own a significant proportion of Kunming Chuan Jin Nuo Chemical Co., Ltd.. Insiders have a CN¥1.1b stake in this CN¥3.5b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of Kunming Chuan Jin Nuo Chemical shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. Take risks for example - Kunming Chuan Jin Nuo Chemical has 2 warning signs we think you should be aware of.

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.