Key Insights

• The considerable ownership by retail investors in New East New Materials indicates that they collectively have a greater say in management and business strategy
• The top 9 shareholders own 50% of the company
• Insider ownership in New East New Materials is 42%

A look at the shareholders of New East New Materials Co., Ltd (SHSE:603110) can tell us which group is most powerful. The group holding the most number of shares in the company, around 50% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 42% shares weren't spared from last week's CN¥404m market cap drop, retail investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of New East New Materials, beginning with the chart below.

What Does The Institutional Ownership Tell Us About New East New Materials?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in New East New Materials. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 New East New Materials' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in New East New Materials. The company's largest shareholder is Guangbin Xu, with ownership of 30%. In comparison, the second and third largest shareholders hold about 8.8% and 4.8% of the stock.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of New East New 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.

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.

Our information suggests that insiders maintain a significant holding in New East New Materials Co., Ltd. Insiders own CN¥1.3b worth of shares in the CN¥3.2b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 50% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand New East New Materials better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for New East New Materials (of which 2 don't sit too well with us!) you should know about.

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.