Key Insights

• The considerable ownership by individual investors in Anhui Zhongyuan New Materials indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 9 shareholders
• 45% of Anhui Zhongyuan New Materials is held by insiders

A look at the shareholders of Anhui Zhongyuan New Materials Co., Ltd. (SHSE:603527) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 45% came under pressure after market cap dropped to CN¥2.2b last week,individual investors took the most losses.

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

What Does The Institutional Ownership Tell Us About Anhui Zhongyuan New Materials?

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.

Anhui Zhongyuan New Materials 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Anhui Zhongyuan New Materials' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Anhui Zhongyuan New Materials. The company's largest shareholder is Quan Hu Feng, with ownership of 26%. For context, the second largest shareholder holds about 9.7% of the shares outstanding, followed by an ownership of 4.5% by the third-largest shareholder.

We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Anhui Zhongyuan New Materials

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.

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 information suggests that insiders maintain a significant holding in Anhui Zhongyuan New Materials Co., Ltd.. Insiders have a CN¥1b stake in this CN¥2.2b business. 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, who are usually individual investors, hold a 46% stake in Anhui Zhongyuan New Materials. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Anhui Zhongyuan New Materials (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.

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.