Key Insights

• Insiders appear to have a vested interest in Zhejiang Zhengguang Industrial's growth, as seen by their sizeable ownership
• The largest shareholder of the company is Jianhua Shen with a 52% stake
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Zhejiang Zhengguang Industrial Co., Ltd. (SZSE:301092), then you'll have to look at the makeup of its share registry. With 73% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit CN¥3.3b market cap following a 18% gain in the stock.

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

What Does The Lack Of Institutional Ownership Tell Us About Zhejiang Zhengguang Industrial?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Zhejiang Zhengguang Industrial's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Zhejiang Zhengguang Industrial is not owned by hedge funds. With a 52% stake, CEO Jianhua Shen is the largest shareholder. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. The second and third largest shareholders are Xuanming Wang and Fayong Lao, with an equal amount of shares to their name at 10.0%. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Zhejiang Zhengguang Industrial

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems that insiders own more than half the Zhejiang Zhengguang Industrial Co., Ltd. stock. This gives them a lot of power. That means they own CN¥2.4b worth of shares in the CN¥3.3b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Zhejiang Zhengguang Industrial. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Zhengguang Industrial better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Zhejiang Zhengguang Industrial (including 1 which is concerning) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.