Key Insights

• Significant control over Hubei Zhenhua ChemicalLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 19 shareholders
• Insiders own 40% of Hubei Zhenhua ChemicalLtd

Every investor in Hubei Zhenhua Chemical Co.,Ltd. (SHSE:603067) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 8.9% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 40% stock also took a hit.

Let's delve deeper into each type of owner of Hubei Zhenhua ChemicalLtd, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Hubei Zhenhua ChemicalLtd?

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.

Hubei Zhenhua ChemicalLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Hubei Zhenhua ChemicalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hubei Zhenhua ChemicalLtd is not owned by hedge funds. Cai Zaihua is currently the company's largest shareholder with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.0% and 1.4%, of the shares outstanding, respectively. Furthermore, CEO Yu Sheng Ke is the owner of 0.6% of the company's shares.

A closer look at our ownership figures suggests that the top 19 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Hubei Zhenhua ChemicalLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems insiders own a significant proportion of Hubei Zhenhua Chemical Co.,Ltd.. Insiders have a CN¥2.4b stake in this CN¥6.0b business. 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

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hubei Zhenhua ChemicalLtd. 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

It seems that Private Companies own 3.3%, of the Hubei Zhenhua ChemicalLtd stock. 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 Hubei Zhenhua ChemicalLtd is showing 1 warning sign in our investment analysis , you should know about...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.