Retail investors who have a significant stake must be disappointed along with institutions after Henan Lingrui Pharmaceutical Co., Ltd.'s (SHSE:600285) market cap dropped by CN¥445m

Key Insights

• The considerable ownership by retail investors in Henan Lingrui Pharmaceutical indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 44% ownership
• 25% of Henan Lingrui Pharmaceutical is held by Institutions

Every investor in Henan Lingrui Pharmaceutical Co., Ltd. (SHSE:600285) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 25% came under pressure after market cap dropped to CN¥13b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Henan Lingrui Pharmaceutical.

Check out our latest analysis for Henan Lingrui Pharmaceutical

What Does The Institutional Ownership Tell Us About Henan Lingrui Pharmaceutical?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Henan Lingrui Pharmaceutical already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Henan Lingrui Pharmaceutical's earnings history below. Of course, the future is what really matters.

Henan Lingrui Pharmaceutical is not owned by hedge funds. Our data shows that Henan Lingrui Group Co., Ltd. is the largest shareholder with 22% of shares outstanding. With 4.4% and 4.1% of the shares outstanding respectively, GF Fund Management Co., Ltd. and National Council for Social Security Fund are the second and third largest shareholders. Additionally, the company's CEO Wei Xiong directly holds 0.6% of the total shares outstanding.

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.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Henan Lingrui Pharmaceutical

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Henan Lingrui Pharmaceutical Co., Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CN¥180m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 52% stake in Henan Lingrui Pharmaceutical, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 22%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Henan Lingrui Pharmaceutical better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Henan Lingrui Pharmaceutical 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.