Key Insights

• Significant insider control over Guangzhou Lushan New Materials implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 51% ownership
• 21% of Guangzhou Lushan New Materials is held by Institutions

If you want to know who really controls Guangzhou Lushan New Materials Co., Ltd. (SHSE:603051), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 48% ownership. 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 14% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Guangzhou Lushan New Materials.

View our latest analysis for Guangzhou Lushan New Materials

What Does The Institutional Ownership Tell Us About Guangzhou Lushan New Materials?

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.

As you can see, institutional investors have a fair amount of stake in Guangzhou Lushan New Materials. 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 Guangzhou Lushan New Materials, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Guangzhou Lushan New Materials. With a 37% stake, CEO Jiasheng Wang is the largest shareholder. With 7.1% and 4.0% of the shares outstanding respectively, Lina Han and Guangzhou Rixin Bao'an New Material Industry Investment Co., Ltd. are the second and third largest shareholders. Interestingly, the second-largest shareholder, Lina Han is also Other Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Guangzhou Lushan New Materials

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. 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.

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 a reasonable proportion of Guangzhou Lushan New Materials Co., Ltd.. Insiders have a CN¥1.7b stake in this CN¥3.5b 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

The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Guangzhou Lushan New Materials , and understanding them should be part of your investment process.

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.