With 39% stake, Eyebright Medical Technology (Beijing) Co., Ltd. (SHSE:688050) seems to have captured institutional investors' interest

Key Insights

• Institutions' substantial holdings in Eyebright Medical Technology (Beijing) implies that they have significant influence over the company's share price
• The top 11 shareholders own 51% of the company
• 22% of Eyebright Medical Technology (Beijing) is held by insiders

To get a sense of who is truly in control of Eyebright Medical Technology (Beijing) Co., Ltd. (SHSE:688050), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let's delve deeper into each type of owner of Eyebright Medical Technology (Beijing), beginning with the chart below.

View our latest analysis for Eyebright Medical Technology (Beijing)

What Does The Institutional Ownership Tell Us About Eyebright Medical Technology (Beijing)?

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.

We can see that Eyebright Medical Technology (Beijing) does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Eyebright Medical Technology (Beijing)'s historic earnings and revenue below, but keep in mind there's always more to the story.

Eyebright Medical Technology (Beijing) is not owned by hedge funds. The company's CEO Jiangbing Xie is the largest shareholder with 13% of shares outstanding. With 8.6% and 5.8% of the shares outstanding respectively, Lipin Mao and Beijing Bojiang Hechuang Technology Co., Ltd. are the second and third largest shareholders.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Eyebright Medical Technology (Beijing)

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 Eyebright Medical Technology (Beijing) Co., Ltd.. Insiders own CN¥3.2b worth of shares in the CN¥15b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Eyebright Medical Technology (Beijing). 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 Company Ownership

It seems that Private Companies own 11%, of the Eyebright Medical Technology (Beijing) 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Eyebright Medical Technology (Beijing) has 1 warning sign 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.

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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.