Key Insights

• The considerable ownership by individual investors in Xinxiang Chemical Fiber indicates that they collectively have a greater say in management and business strategy
• A total of 16 investors have a majority stake in the company with 50% ownership
• Institutions own 21% of Xinxiang Chemical Fiber

Every investor in Xinxiang Chemical Fiber Co., Ltd. (SZSE:000949) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors as a group endured the highest losses last week after market cap fell by CN¥547m.

Let's take a closer look to see what the different types of shareholders can tell us about Xinxiang Chemical Fiber.

What Does The Institutional Ownership Tell Us About Xinxiang Chemical Fiber?

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.

We can see that Xinxiang Chemical Fiber does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Xinxiang Chemical Fiber, (below). Of course, keep in mind that there are other factors to consider, too.

Xinxiang Chemical Fiber is not owned by hedge funds. Xinxiang Bailu Investment Group Co., Ltd. is currently the largest shareholder, with 27% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 1.8% by the third-largest shareholder.

After doing some more digging, we found that the top 16 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Xinxiang Chemical Fiber

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. 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.

Our most recent data indicates that insiders own less than 1% of Xinxiang Chemical Fiber Co., Ltd.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It seems the board members have no more than CN¥2.1m worth of shares in the CN¥5.8b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 49% stake in the company, and hence can't easily be ignored. 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 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. Be aware that Xinxiang Chemical Fiber 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.