Key Insights

• Significant control over Yueyang Xingchang Petro-Chemical by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 8 shareholders own 51% of the company
• 16% of Yueyang Xingchang Petro-Chemical is held by Institutions

A look at the shareholders of Yueyang Xingchang Petro-Chemical Co., Ltd. (SZSE:000819) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, individual investors endured the biggest losses as the stock fell by 7.2%.

Let's take a closer look to see what the different types of shareholders can tell us about Yueyang Xingchang Petro-Chemical.

What Does The Institutional Ownership Tell Us About Yueyang Xingchang Petro-Chemical?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Yueyang Xingchang Petro-Chemical 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 Yueyang Xingchang Petro-Chemical'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 Yueyang Xingchang Petro-Chemical. Looking at our data, we can see that the largest shareholder is China Petrochemical Corporation with 23% of shares outstanding. Hunan Changlian Xingzhang Enterprise Services Co., Ltd. is the second largest shareholder owning 7.9% of common stock, and First Seafront Fund Management Co., Ltd holds about 6.5% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Yueyang Xingchang Petro-Chemical

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

Our information suggests that Yueyang Xingchang Petro-Chemical Co., Ltd. insiders own under 1% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about CN¥15m worth of stock. This compares to a market capitalization of CN¥5.4b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yueyang Xingchang Petro-Chemical. 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

We can see that Private Companies own 37%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Yueyang Xingchang Petro-Chemical (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.