Key Insights

• Institutions' substantial holdings in Xinzhi Group implies that they have significant influence over the company's share price
• 51% of the business is held by the top 4 shareholders
• Insider ownership in Xinzhi Group is 26%

A look at the shareholders of Xinzhi Group Co., Ltd. (SZSE:002664) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors endured the highest losses after the company's share price fell by 6.8% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 2.4% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Xinzhi Group, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of Xinzhi Group, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Xinzhi Group?

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.

Xinzhi Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Xinzhi Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Xinzhi Group. Looking at our data, we can see that the largest shareholder is CITIC Asset Management Corporation, Ltd with 26% of shares outstanding. The second and third largest shareholders are Xiaoqing Ye and Xingman Yin, with an equal amount of shares to their name at 11%.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Xinzhi Group

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.

Our information suggests that insiders maintain a significant holding in Xinzhi Group Co., Ltd.. It has a market capitalization of just CN¥5.1b, and insiders have CN¥1.3b worth of shares in their own names. 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

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinzhi Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Xinzhi Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Xinzhi Group you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.