Zhengzhou Tiamaes Technology Co.,Ltd's (SZSE:300807) market cap dropped CN¥725m last week; Individual investors bore the brunt

Key Insights

• Significant control over Zhengzhou Tiamaes TechnologyLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 3 shareholders
• Insider ownership in Zhengzhou Tiamaes TechnologyLtd is 32%

To get a sense of who is truly in control of Zhengzhou Tiamaes Technology Co.,Ltd (SZSE:300807), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 44% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 24% price drop, insiders with their 32% also suffered.

In the chart below, we zoom in on the different ownership groups of Zhengzhou Tiamaes TechnologyLtd.

View our latest analysis for Zhengzhou Tiamaes TechnologyLtd

What Does The Institutional Ownership Tell Us About Zhengzhou Tiamaes TechnologyLtd?

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.

As you can see, institutional investors have a fair amount of stake in Zhengzhou Tiamaes TechnologyLtd. 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. 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 Zhengzhou Tiamaes TechnologyLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Zhengzhou Tiamaes TechnologyLtd is not owned by hedge funds. With a 32% stake, CEO Jianguo Guo is the largest shareholder. In comparison, the second and third largest shareholders hold about 15% and 4.7% of the stock.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Zhengzhou Tiamaes TechnologyLtd

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.

It seems insiders own a significant proportion of Zhengzhou Tiamaes Technology Co.,Ltd. Insiders have a CN¥778m stake in this CN¥2.4b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 15%, of the Zhengzhou Tiamaes TechnologyLtd 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhengzhou Tiamaes TechnologyLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Zhengzhou Tiamaes TechnologyLtd you should know about.

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.

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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.