Individual investors invested in Zhejiang Huahai Pharmaceutical Co., Ltd. (SHSE:600521) up 5.2% last week, insiders too were rewarded

Key Insights

• Significant control over Zhejiang Huahai Pharmaceutical by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 13 investors have a majority stake in the company with 50% ownership
• 42% of Zhejiang Huahai Pharmaceutical is held by insiders

If you want to know who really controls Zhejiang Huahai Pharmaceutical Co., Ltd. (SHSE:600521), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 5.2% price gain, insiders also received a 42% cut.

Let's delve deeper into each type of owner of Zhejiang Huahai Pharmaceutical, beginning with the chart below.

View our latest analysis for Zhejiang Huahai Pharmaceutical

What Does The Institutional Ownership Tell Us About Zhejiang Huahai Pharmaceutical?

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 Zhejiang Huahai Pharmaceutical. 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 Zhejiang Huahai Pharmaceutical's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Zhejiang Huahai Pharmaceutical. The company's CEO Bao Hua Chen is the largest shareholder with 25% of shares outstanding. With 15% and 1.9% of the shares outstanding respectively, Ming Hua Zhou and Zhong Ou Fund Management Co., Ltd are the second and third largest shareholders.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. 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 Zhejiang Huahai Pharmaceutical

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.

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 most recent data indicates that insiders own a reasonable proportion of Zhejiang Huahai Pharmaceutical Co., Ltd.. It has a market capitalization of just CN¥23b, and insiders have CN¥9.6b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 42% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Huahai Pharmaceutical better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Zhejiang Huahai Pharmaceutical you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.