Recent 7.2% pullback would hurt Chengdu Bright Eye Hospital Co., Ltd. (SZSE:301239) insiders

Key Insights

• Chengdu Bright Eye Hospital's significant insider ownership suggests inherent interests in company's expansion
• A total of 3 investors have a majority stake in the company with 50% ownership
• Institutions own 27% of Chengdu Bright Eye Hospital

Every investor in Chengdu Bright Eye Hospital Co., Ltd. (SZSE:301239) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 44% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to CN¥6.6b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Chengdu Bright Eye Hospital.

Check out our latest analysis for Chengdu Bright Eye Hospital

What Does The Institutional Ownership Tell Us About Chengdu Bright Eye Hospital?

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.

As you can see, institutional investors have a fair amount of stake in Chengdu Bright Eye Hospital. 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 Chengdu Bright Eye Hospital's historic earnings and revenue below, but keep in mind there's always more to the story.

Chengdu Bright Eye Hospital is not owned by hedge funds. Xuyang Xu is currently the largest shareholder, with 43% of shares outstanding. Fusui Zhengxin Investment Partnership Enterprise (Limited Partnership) is the second largest shareholder owning 4.0% of common stock, and Fusui Jinguan Qingcheng Investment Partnership Enterprise (Limited Partnership) holds about 3.1% of the company stock.

After doing some more digging, we found that the top 3 shareholders collectively control more than half 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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Chengdu Bright Eye Hospital

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 Chengdu Bright Eye Hospital Co., Ltd.. Insiders have a CN¥2.9b stake in this CN¥6.6b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Chengdu Bright Eye Hospital. 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

We can see that Private Companies own 8.9%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 instance, we've identified 2 warning signs for Chengdu Bright Eye Hospital that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.