Key Insights

• Significant control over China Northern Rare Earth (Group) High-TechLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 15 shareholders own 50% of the company
• Institutional ownership in China Northern Rare Earth (Group) High-TechLtd is 10%

Every investor in China Northern Rare Earth (Group) High-Tech Co.,Ltd (SHSE:600111) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 48% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors were the biggest beneficiaries of last week's 6.6% gain.

In the chart below, we zoom in on the different ownership groups of China Northern Rare Earth (Group) High-TechLtd.

What Does The Institutional Ownership Tell Us About China Northern Rare Earth (Group) High-TechLtd?

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.

China Northern Rare Earth (Group) High-TechLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 China Northern Rare Earth (Group) High-TechLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in China Northern Rare Earth (Group) High-TechLtd. Baotou Steel (Group) Co., Ltd is currently the largest shareholder, with 37% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.3% and 2.8%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 15 have the combined ownership of 50% 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of China Northern Rare Earth (Group) High-TechLtd

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own less than 1% of China Northern Rare Earth (Group) High-Tech Co.,Ltd. But they may have an indirect interest through a corporate structure that we haven't picked up on. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CN¥3.6m of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Northern Rare Earth (Group) High-TechLtd. 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 Company Ownership

We can see that Private Companies own 41%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China Northern Rare Earth (Group) High-TechLtd better, we need to consider many other factors. Be aware that China Northern Rare Earth (Group) High-TechLtd is showing 1 warning sign in our investment analysis , you should know about...

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.

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