Last week’s 9.3% fall in JA Solar Technology Co Ltd (SZSE:002459) must have disappointed private companies with large stakes.

Key Insights

Investors in JA Solar Technology Co., Ltd. (SZSE:002459) should be aware of the most powerful shareholder groups. With a stake of 57%, private companies hold the largest shares in the company, meaning this group has the greatest upside potential (or downside risk).

As a result, the private company suffered the biggest loss as a group last week, with its market capitalization falling by 3.5 billion yuan.

Let’s take a closer look to see what the different types of shareholders can tell us about JA Solar Technology.

Read our latest analysis for JA Solar Technology

What does institutional ownership tell us about JA Solar Technology?

Institutional investors commonly compare their own company’s earnings to the earnings of a commonly tracked index, so they typically consider buying large companies that are included in the relevant benchmark index.

We can see that JA Solar Technology has institutional investors, and they hold a significant percentage of the company’s shares. This may indicate that the company has a certain degree of credibility in the investment community. However, it’s best to be careful about relying on the approval of institutional investors; they get it wrong sometimes, too. When multiple institutions own a stock, there’s always a risk that it can get caught in a ‘crowded trade’. If such a trade goes wrong, multiple parties may compete to sell shares fast. This risk is higher in companies without a history of growth. You can see JA Solar Technology’s historic earnings and revenue below, but keep in mind that there’s always more to the story.

We note that hedge funds don’t have a large investment in JA Solar Technology. Looking at our data, we can see that the largest shareholder is Ningjin Jingtaifu Technology Co., Ltd. with 48% of shares outstanding, while the second and third largest shareholders hold 4.1% and 3.9% of the shares outstanding, respectively.

What makes our research even more interesting is that we discovered that the top two shareholders hold majority ownership in the company, giving them enough 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 sentiment to know which way the wind is blowing. There are a fair number of analysts covering the stock, so you can look up forecast growth fairly easily.

Insider Ownership of JA Solar Technology

The definition of an insider varies slightly between countries, but members of the board of directors always count. Management are ultimately responsible to the board of directors, however, it is not uncommon for management to also be members of the executive board, particularly if they are founders or CEOs.

While most view insider ownership as a positive because it can indicate the board is well aligned with other shareholders, in some cases it can lead to too much power being concentrated in one group.

Our data suggests that insiders own less than 1% of JA Solar Technology Co., Ltd. shares. However, they may have an indirect interest through corporate structures that we’re not aware of. Because it’s a large company, even a small percentage interest can give rise to a board and shareholder agreement. In this case, insiders own RMB103m worth of shares. It’s always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General public property

With 30% ownership, the general public, primarily retail investors, have some influence over JA Solar Technology. This size of ownership is significant. However, it may not be enough to change company policy if the decision is not in line with other large shareholders.

Private Ownership

According to our data, private companies hold 57% of the company’s shares. This may be worth investigating further. If related parties (such as insiders) have an interest in these private companies, they should disclose it 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 consider: risk, for example. Three Warning Signs (And one potentially serious issue) that we think you should know about.

But in the end That’s the futureIt is the present, not the past, that will determine how successful the owners of this business will be, so we therefore recommend you take a look at this free report which shows whether analysts are predicting a brighter future.

Note: The figures in this article are calculated using data from the last 12 months, which refers to the 12-month period ending on the last day of the month in which the financial statements are dated, which may not match the figures in the annual report.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com