Key Insights

• The considerable ownership by individual investors in Daoming Optics&ChemicalLtd indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 5 shareholders
• Insider ownership in Daoming Optics&ChemicalLtd is 11%

If you want to know who really controls Daoming Optics&Chemical Co.,Ltd (SZSE:002632), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, individual investors collectively scored the highest last week as the company hit CN¥4.6b market cap following a 8.6% gain in the stock.

Let's delve deeper into each type of owner of Daoming Optics&ChemicalLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Daoming Optics&ChemicalLtd?

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.

Less than 5% of Daoming Optics&ChemicalLtd is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Daoming Optics&ChemicalLtd. The company's largest shareholder is Zhejiang Daoming Investment Co., Ltd., with ownership of 40%. In comparison, the second and third largest shareholders hold about 6.7% and 1.4% of the stock. Note that the second and third-largest shareholders are also Senior Key Executive and Chairman of the Board, respectively, meaning that the company's top shareholders are insiders.

On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in 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. 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 Daoming Optics&ChemicalLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Daoming Optics&Chemical Co.,Ltd. It has a market capitalization of just CN¥4.6b, and insiders have CN¥526m worth of shares in their own names. 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 45% stake in Daoming Optics&ChemicalLtd. 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 Equity Ownership

With a stake of 40%, private equity firms could influence the Daoming Optics&ChemicalLtd board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Daoming Optics&ChemicalLtd is showing 4 warning signs in our investment analysis , and 1 of those is significant...

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.