Key Insights

• The considerable ownership by individual investors in Nanjing Red SunLtd indicates that they collectively have a greater say in management and business strategy
• 49% of the business is held by the top 8 shareholders
• Institutional ownership in Nanjing Red SunLtd is 15%

If you want to know who really controls Nanjing Red Sun Co.,Ltd. (SZSE:000525), then you'll have to look at the makeup of its share registry. 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).

As a result, individual investors were the biggest beneficiaries of last week's 9.5% gain.

Let's delve deeper into each type of owner of Nanjing Red SunLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Nanjing Red SunLtd?

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 Nanjing Red SunLtd. 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 Nanjing Red SunLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Nanjing Red SunLtd. Nanjing No. 1 Pesticide Group Co., Ltd. is currently the company's largest shareholder with 31% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 1.6% by the third-largest shareholder.

On studying our ownership data, we found that 8 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Nanjing Red SunLtd

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.

Our most recent data indicates that insiders own less than 1% of Nanjing Red Sun Co.,Ltd.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just CN¥4.1b, and the board has only CN¥35m worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 51% stake in Nanjing Red SunLtd, suggesting it is a fairly popular stock. 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.

Private Company Ownership

It seems that Private Companies own 33%, of the Nanjing Red SunLtd stock. 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 Nanjing Red SunLtd better, we need to consider many other factors. For instance, we've identified 1 warning sign for Nanjing Red SunLtd that 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.