Key Insights

• The considerable ownership by private companies in Ningbo Runhe High-Tech Materials indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 53% of the company
• Insider ownership in Ningbo Runhe High-Tech Materials is 15%

To get a sense of who is truly in control of Ningbo Runhe High-Tech Materials Co., Ltd. (SZSE:300727), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 48% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, private companies endured the biggest losses as the stock fell by 20%.

Let's take a closer look to see what the different types of shareholders can tell us about Ningbo Runhe High-Tech Materials.

What Does The Institutional Ownership Tell Us About Ningbo Runhe High-Tech Materials?

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.

Ningbo Runhe High-Tech Materials 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Ningbo Runhe High-Tech Materials, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ningbo Runhe High-Tech Materials. Zhejiang Runhe Holding Co., Ltd. is currently the largest shareholder, with 41% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 5.7% of the stock. Jianping Ye, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Ningbo Runhe High-Tech Materials

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Ningbo Runhe High-Tech Materials Co., Ltd.. Insiders own CN¥417m worth of shares in the CN¥2.8b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in Ningbo Runhe High-Tech Materials. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 48%, of the Ningbo Runhe High-Tech Materials stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Take risks for example - Ningbo Runhe High-Tech Materials has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.