Key Insights

• Significant control over Zhejiang RIFA Precision Machinery by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 23 shareholders own 43% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Zhejiang RIFA Precision Machinery Co., Ltd. (SZSE:002520) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, retail investors endured the biggest losses as the stock fell by 8.0%.

Let's delve deeper into each type of owner of Zhejiang RIFA Precision Machinery, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Zhejiang RIFA Precision Machinery?

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.

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

Hedge funds don't have many shares in Zhejiang RIFA Precision Machinery. Looking at our data, we can see that the largest shareholder is Zhejiang Rifa Holding Group Co.,Ltd with 27% of shares outstanding. Jie Wu is the second largest shareholder owning 5.5% of common stock, and Hangzhou Jintou Asset Management Co., Ltd. holds about 3.5% of the company stock.

On studying our ownership data, we found that 23 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang RIFA Precision Machinery

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

We can see that insiders own shares in Zhejiang RIFA Precision Machinery Co., Ltd.. In their own names, insiders own CN¥392m worth of stock in the CN¥4.7b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 57% of Zhejiang RIFA Precision Machinery shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 27%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Zhejiang RIFA Precision Machinery (1 is potentially serious) that you should be aware of.

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.

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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.