Key Insights

• The considerable ownership by retail investors in Zhejiang Xinao Textiles indicates that they collectively have a greater say in management and business strategy
• A total of 4 investors have a majority stake in the company with 52% ownership
• 19% of Zhejiang Xinao Textiles is held by insiders

Every investor in Zhejiang Xinao Textiles Inc. (SHSE:603889) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, retail investors benefitted the most after the company's market cap rose by CN¥818m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Zhejiang Xinao Textiles.

What Does The Institutional Ownership Tell Us About Zhejiang Xinao Textiles?

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.

As you can see, institutional investors have a fair amount of stake in Zhejiang Xinao Textiles. 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 Zhejiang Xinao Textiles, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Zhejiang Xinao Textiles. Zhejiang Xinao Industry Co, Limited is currently the company's largest shareholder with 30% of shares outstanding. In comparison, the second and third largest shareholders hold about 14% and 3.9% of the stock.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Zhejiang Xinao Textiles

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.

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.

It seems insiders own a significant proportion of Zhejiang Xinao Textiles Inc.. It has a market capitalization of just CN¥5.4b, and insiders have CN¥1.0b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 36% stake in Zhejiang Xinao Textiles. 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 30%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Zhejiang Xinao Textiles .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.