Key Insights

• Institutions' substantial holdings in Glodon implies that they have significant influence over the company's share price
• A total of 17 investors have a majority stake in the company with 51% ownership
• 32% of Glodon is held by insiders

To get a sense of who is truly in control of Glodon Company Limited (SZSE:002410), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 34% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors would appreciate the 17% increase in share price last week, given their one-year losses have totalled a disappointing 65%.

Let's take a closer look to see what the different types of shareholders can tell us about Glodon.

What Does The Institutional Ownership Tell Us About Glodon?

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.

Glodon already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Glodon, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Glodon. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Glodon's case, its Top Key Executive, Zhi Zhong Diao, is the largest shareholder, holding 16% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.8% and 4.3%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Jinhong Wang is also a Chairman of Corporate Board, again, indicating strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 17 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Glodon

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own a reasonable proportion of Glodon Company Limited. Insiders own CN¥5.3b worth of shares in the CN¥17b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. 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.

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 - Glodon has 2 warning signs we think you should be aware of.

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.

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