Key Insights

• The considerable ownership by private companies in Shaanxi Xinghua ChemistryLtd indicates that they collectively have a greater say in management and business strategy
• A total of 2 investors have a majority stake in the company with 57% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Shaanxi Xinghua Chemistry Co.,Ltd (SZSE:002109) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 58% 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 14%.

Let's delve deeper into each type of owner of Shaanxi Xinghua ChemistryLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Shaanxi Xinghua ChemistryLtd?

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.

We can see that Shaanxi Xinghua ChemistryLtd does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Shaanxi Xinghua ChemistryLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Shaanxi Xinghua ChemistryLtd is not owned by hedge funds. Shaanxi Yanchang Petroleum (Group) Co., Ltd. is currently the company's largest shareholder with 40% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 17% and 2.4%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 57% stake.

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. 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 Shaanxi Xinghua ChemistryLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own less than 1% of Shaanxi Xinghua Chemistry Co.,Ltd. But they may have an indirect interest through a corporate structure that we haven't picked up on. It has a market capitalization of just CN¥3.4b, and the board has only CN¥6.4m 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

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shaanxi Xinghua ChemistryLtd. 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 58%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Shaanxi Xinghua ChemistryLtd is showing 3 warning signs in our investment analysis , and 2 of those can't be ignored...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com