If you want to know who really controls Hutchison China MediTech Limited (LON:HCM), then you’ll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.
Hutchison China MediTech is a pretty big company. It has a market capitalization of UK£2.9b. Normally institutions would own a significant portion of a company this size. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let’s delve deeper into each type of owner, to discover more about Hutchison China MediTech.
What Does The Institutional Ownership Tell Us About Hutchison China MediTech?
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 own 31% of Hutchison China MediTech. 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. 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 Hutchison China MediTech’s earnings history, below. Of course, the future is what really matters.
We note that hedge funds don’t have a meaningful investment in Hutchison China MediTech. Our data shows that Hutchison Whampoa (China) Limited is the largest shareholder with 50% of shares outstanding. The second largest shareholder with 4.8%, is M&G Investment Management Limited, followed by Capital Group International Inc., with an ownership of 4.0%.
Our analysis suggests that the top 2 shareholders collectively control 55% of the company’s shares, implying that they have considerable power to influence the company’s decisions.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Hutchison China MediTech
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Shareholders would probably be interested to learn that insiders own shares in Hutchison China MediTech Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around UK£93m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 12% ownership, the general public have some degree of sway over HCM. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
Private equity firms hold a 50% stake in HCM. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Public Company Ownership
It appears to us that public companies own 4.0% of HCM. We can’t be certain, but this is quite possible this is a strategic stake. The businesses may be similar, or work together.
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. Take risks, for example – Hutchison China MediTech has 3 warning signs we think you should be aware of.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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