Zhongrun Resources Investment Corporation (SZSE:000506) surges 10%; individual investors who own 60% shares profited along with institutions

Simply Wall St · 10/16 22:36

Key Insights

To get a sense of who is truly in control of Zhongrun Resources Investment Corporation (SZSE:000506), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 60% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s CN¥139m market cap gain, institutions too had a 28% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Zhongrun Resources Investment.

See our latest analysis for Zhongrun Resources Investment

ownership-breakdown
SZSE:000506 Ownership Breakdown October 16th 2024

What Does The Institutional Ownership Tell Us About Zhongrun Resources Investment?

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.

We can see that Zhongrun Resources Investment does have institutional investors; and they hold a good portion of the company's stock. 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 Zhongrun Resources Investment's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SZSE:000506 Earnings and Revenue Growth October 16th 2024

Hedge funds don't have many shares in Zhongrun Resources Investment. Ransheng (Ningbo) Equity Investment Fund Management Co., Ltd. is currently the largest shareholder, with 25% of shares outstanding. With 7.1% and 4.9% of the shares outstanding respectively, Beijing Guotou Huicheng Venture Capital Management Co., Ltd. and Ningbo Meishan Free Trade Port Area Ransheng Shengchang Investment Management Partnership Enterprise are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 10 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Zhongrun Resources Investment

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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 60% stake in Zhongrun Resources Investment, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With a stake of 7.1%, private equity firms could influence the Zhongrun Resources Investment board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 4.9%, of the company's shares. 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. To that end, you should be aware of the 2 warning signs we've spotted with Zhongrun Resources Investment .

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.