Sinocare Inc. (SZSE:300298) CEO Shao Bo Li, the company's largest shareholder sees 9.6% reduction in holdings value

Key Insights

• Insiders appear to have a vested interest in Sinocare's growth, as seen by their sizeable ownership
• A total of 3 investors have a majority stake in the company with 57% ownership
• 24% of Sinocare is held by Institutions

To get a sense of who is truly in control of Sinocare Inc. (SZSE:300298), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% 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.

And following last week's 9.6% decline in share price, insiders suffered the most losses.

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

See our latest analysis for Sinocare

What Does The Institutional Ownership Tell Us About Sinocare?

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.

We can see that Sinocare 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sinocare, (below). Of course, keep in mind that there are other factors to consider, too.

Sinocare is not owned by hedge funds. With a 26% stake, CEO Shao Bo Li is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 22% and 9.4%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Sinocare

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our information suggests that insiders maintain a significant holding in Sinocare Inc.. It has a market capitalization of just CN¥14b, and insiders have CN¥6.7b worth of shares in their own names. That's quite significant. 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

The general public-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. 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.

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 3 warning signs for Sinocare you should know about.

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.

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