Key Insights

• Insiders appear to have a vested interest in Zhejiang Zhongke Magnetic Industry's growth, as seen by their sizeable ownership
• The top 3 shareholders own 64% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Zhejiang Zhongke Magnetic Industry Co., Ltd. (SZSE:301141) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 64% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 8.2% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Zhejiang Zhongke Magnetic Industry.

What Does The Institutional Ownership Tell Us About Zhejiang Zhongke Magnetic Industry?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Zhejiang Zhongke Magnetic Industry 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Zhejiang Zhongke Magnetic Industry's earnings history below. Of course, the future is what really matters.

Zhejiang Zhongke Magnetic Industry is not owned by hedge funds. The company's CEO Zhongping Wu is the largest shareholder with 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 15%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Weiping Wu is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 64% stake.

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 Zhongke Magnetic Industry

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own the majority of Zhejiang Zhongke Magnetic Industry Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of CN¥4.4b, that means they have CN¥2.8b worth of shares. 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

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Zhongke Magnetic Industry. 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 7.2%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Zhongke Magnetic Industry better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Zhejiang Zhongke Magnetic Industry (of which 3 are potentially serious!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.