Key Insights

• Significant control over CNGR Advanced MaterialLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• Hunan Zhongwei Holding Group Co.,Ltd. owns 52% of the company
• Institutions own 18% of CNGR Advanced MaterialLtd

A look at the shareholders of CNGR Advanced Material Co.,Ltd. (SZSE:300919) can tell us which group is most powerful. With 55% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies collectively scored the highest last week as the company hit CN¥26b market cap following a 3.6% gain in the stock.

In the chart below, we zoom in on the different ownership groups of CNGR Advanced MaterialLtd.

What Does The Institutional Ownership Tell Us About CNGR Advanced MaterialLtd?

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.

CNGR Advanced MaterialLtd 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see CNGR Advanced MaterialLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in CNGR Advanced MaterialLtd. Hunan Zhongwei Holding Group Co.,Ltd. is currently the company's largest shareholder with 52% 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 3.2% and 1.8% of the shares outstanding respectively, Weiming Deng and Legend Capital Management Co., Ltd. are the second and third largest shareholders. Weiming Deng, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 CNGR Advanced MaterialLtd

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. 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.

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.

We can report that insiders do own shares in CNGR Advanced Material Co.,Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥988m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CNGR Advanced MaterialLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 55%, 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 CNGR Advanced MaterialLtd better, we need to consider many other factors. For instance, we've identified 2 warning signs for CNGR Advanced MaterialLtd (1 can't be ignored) that 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.