Key Insights

• The considerable ownership by private companies in Hangzhou First Applied Material indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 62% of the company
• Insiders own 13% of Hangzhou First Applied Material

A look at the shareholders of Hangzhou First Applied Material Co., Ltd. (SHSE:603806) 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 private companies. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 4.5% decline in share price, private companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Hangzhou First Applied Material.

What Does The Institutional Ownership Tell Us About Hangzhou First Applied Material?

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.

Hangzhou First Applied Material 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. 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 Hangzhou First Applied Material's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Hangzhou First Applied Material. Our data shows that Hangzhou First Technology Group Co., Ltd. is the largest shareholder with 49% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 1.4% of the stock. Jianhua Lin, who is the second-largest shareholder, also happens to hold the title of President.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Hangzhou First Applied Material

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Hangzhou First Applied Material Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥5.1b stake in this CN¥38b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hangzhou First Applied Material. 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

We can see that Private Companies own 50%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Hangzhou First Applied Material .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.