Key Insights

• Liaoning Dingjide Petrochemical's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Zaiming Zhang with a 53% stake
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Liaoning Dingjide Petrochemical Co., Ltd. (SHSE:603255) should be aware of the most powerful shareholder groups. With 72% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week's 11% gain.

Let's delve deeper into each type of owner of Liaoning Dingjide Petrochemical, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Liaoning Dingjide Petrochemical?

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.

Liaoning Dingjide Petrochemical already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Liaoning Dingjide Petrochemical, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Liaoning Dingjide Petrochemical. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Liaoning Dingjide Petrochemical's case, its Top Key Executive, Zaiming Zhang, is the largest shareholder, holding 53% of shares outstanding. Weirong Xin is the second largest shareholder owning 16% of common stock, and Hengqin Yongying Investment Management Co., Ltd. holds about 2.4% of the company stock. Interestingly, the second-largest shareholder, Weirong Xin is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

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. 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 Liaoning Dingjide Petrochemical

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.

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 information suggests that insiders own more than half of Liaoning Dingjide Petrochemical Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥4.3b, that means they have CN¥3.1b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 18% 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Liaoning Dingjide Petrochemical you should be aware of, and 2 of them are potentially serious.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

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