Beijing Balance Medical Technology Co.,Ltd. (SHSE:688198) CEO Lei Jin, the company's largest shareholder sees 3.5% reduction in holdings value

Key Insights

• Significant insider control over Beijing Balance Medical TechnologyLtd implies vested interests in company growth
• 67% of the company is held by a single shareholder (Lei Jin)
• Institutions own 11% of Beijing Balance Medical TechnologyLtd

Every investor in Beijing Balance Medical Technology Co.,Ltd. (SHSE:688198) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 68% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CN¥14b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Beijing Balance Medical TechnologyLtd.

See our latest analysis for Beijing Balance Medical TechnologyLtd

What Does The Institutional Ownership Tell Us About Beijing Balance Medical TechnologyLtd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Beijing Balance Medical TechnologyLtd. 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 Beijing Balance Medical TechnologyLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Beijing Balance Medical TechnologyLtd is not owned by hedge funds. The company's CEO Lei Jin is the largest shareholder with 67% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. In comparison, the second and third largest shareholders hold about 6.1% and 2.8% of the stock.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Beijing Balance Medical TechnologyLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders own more than half of Beijing Balance Medical Technology Co.,Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥14b, that means insiders have a whopping CN¥9.2b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Beijing Balance Medical TechnologyLtd. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 6.1%, of the Beijing Balance Medical TechnologyLtd stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. For example, we've discovered 2 warning signs for Beijing Balance Medical TechnologyLtd that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com