Key Insights

• Significant control over Shandong Kaisheng New MaterialsLtd by public companies implies that the general public has more power to influence management and governance-related decisions
• 52% of the business is held by the top 2 shareholders
• Institutional ownership in Shandong Kaisheng New MaterialsLtd is 13%

Every investor in Shandong Kaisheng New Materials Co.,Ltd. (SZSE:301069) should be aware of the most powerful shareholder groups. With 45% stake, public companies 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 following last week's 6.3% decline in share price, public companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Shandong Kaisheng New MaterialsLtd.

What Does The Institutional Ownership Tell Us About Shandong Kaisheng New MaterialsLtd?

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.

Shandong Kaisheng New MaterialsLtd 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 Shandong Kaisheng New MaterialsLtd's earnings history below. Of course, the future is what really matters.

Shandong Kaisheng New MaterialsLtd is not owned by hedge funds. The company's largest shareholder is Huapont Life Sciences Co.,Ltd, with ownership of 45%. Jiarong Wang is the second largest shareholder owning 7.5% of common stock, and Zibo Kaisheng Investment Center (Limited Partnership) holds about 6.8% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

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. 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 Shandong Kaisheng New MaterialsLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can report that insiders do own shares in Shandong Kaisheng New Materials Co.,Ltd.. It has a market capitalization of just CN¥5.9b, and insiders have CN¥533m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shandong Kaisheng New MaterialsLtd. 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 6.8%, private equity firms could influence the Shandong Kaisheng New MaterialsLtd board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Public Company Ownership

It appears to us that public companies own 45% of Shandong Kaisheng New MaterialsLtd. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Shandong Kaisheng New MaterialsLtd (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com