Key Insights

• Significant control over Shandong Cynda 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 21 shareholders
• 44% of Shandong Cynda ChemicalLtd is held by insiders

To get a sense of who is truly in control of Shandong Cynda Chemical Co.,Ltd. (SHSE:603086), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 22% increase in the stock price last week, retail investors profited the most, but insiders who own 44% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Shandong Cynda ChemicalLtd.

What Does The Institutional Ownership Tell Us About Shandong Cynda 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.

As you can see, institutional investors have a fair amount of stake in Shandong Cynda ChemicalLtd. 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. 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 Shandong Cynda ChemicalLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Shandong Cynda ChemicalLtd. Our data shows that Xian Quan Wang is the largest shareholder with 29% of shares outstanding. With 7.4% and 4.0% of the shares outstanding respectively, Ming Yu Chen and Shenjian Wang are the second and third largest shareholders. Shenjian Wang, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

A closer look at our ownership figures suggests that the top 21 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shandong Cynda ChemicalLtd

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.

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.

It seems insiders own a significant proportion of Shandong Cynda Chemical Co.,Ltd.. Insiders have a CN¥954m stake in this CN¥2.2b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 50% of Shandong Cynda ChemicalLtd 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Shandong Cynda ChemicalLtd .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

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.