Key Insights

• Significant control over CNSIG Inner Mongolia Chemical IndustryLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 50% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in CNSIG Inner Mongolia Chemical Industry Co.,Ltd. (SHSE:600328) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week's 3.9% gain.

Let's take a closer look to see what the different types of shareholders can tell us about CNSIG Inner Mongolia Chemical IndustryLtd.

What Does The Institutional Ownership Tell Us About CNSIG Inner Mongolia Chemical IndustryLtd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that CNSIG Inner Mongolia Chemical IndustryLtd does have institutional investors; and they hold a good portion of the company's stock. 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 CNSIG Inner Mongolia Chemical IndustryLtd'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 CNSIG Inner Mongolia Chemical IndustryLtd. Looking at our data, we can see that the largest shareholder is China National Salt Industry Group Co.,Ltd. with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.4% and 1.5%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 3 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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of CNSIG Inner Mongolia Chemical IndustryLtd

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 less than 1% of CNSIG Inner Mongolia Chemical Industry Co.,Ltd.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥9.9m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 45% stake in CNSIG Inner Mongolia Chemical IndustryLtd. 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 46%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand CNSIG Inner Mongolia Chemical IndustryLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for CNSIG Inner Mongolia Chemical IndustryLtd you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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