Shenzhen Glory Medical Co.,Ltd.'s (SZSE:002551) last week's 11% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Shenzhen Glory MedicalLtd indicates that they collectively have a greater say in management and business strategy
• 43% of the business is held by the top 25 shareholders
• Insiders own 39% of Shenzhen Glory MedicalLtd

To get a sense of who is truly in control of Shenzhen Glory Medical Co.,Ltd. (SZSE:002551), it is important to understand the ownership structure of the business. With 57% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 39% came under pressure after market cap dropped to CN¥2.2b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Shenzhen Glory MedicalLtd.

See our latest analysis for Shenzhen Glory MedicalLtd

What Does The Institutional Ownership Tell Us About Shenzhen Glory MedicalLtd?

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.

Institutions have a very small stake in Shenzhen Glory MedicalLtd. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Shenzhen Glory MedicalLtd is not owned by hedge funds. The company's CEO Guiqiu Liang is the largest shareholder with 30% of shares outstanding. Guitian Liang is the second largest shareholder owning 6.9% of common stock, and Guizhong Liang holds about 1.5% of the company stock. Interestingly, the second-largest shareholder, Guitian Liang is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shenzhen Glory MedicalLtd

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Shenzhen Glory Medical Co.,Ltd.. Insiders have a CN¥852m 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 57% of Shenzhen Glory MedicalLtd shares. 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.

Next Steps:

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Shenzhen Glory MedicalLtd you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.