Retail investors who hold 44% of Zhejiang Huahai Pharmaceutical Co., Ltd. (SHSE:600521) gained 3.6%, insiders profited as well

Key Insights

• Zhejiang Huahai Pharmaceutical's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 16 shareholders own 50% of the company
• Insiders own 42% of Zhejiang Huahai Pharmaceutical

Every investor in Zhejiang Huahai Pharmaceutical Co., Ltd. (SHSE:600521) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that benefitted the most from last week’s CN¥942m market cap gain, insiders too had a 42% share in those profits.

In the chart below, we zoom in on the different ownership groups of Zhejiang Huahai Pharmaceutical.

See our latest analysis for Zhejiang Huahai Pharmaceutical

What Does The Institutional Ownership Tell Us About Zhejiang Huahai 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.

We can see that Zhejiang Huahai Pharmaceutical 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. 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 Zhejiang Huahai Pharmaceutical's earnings history below. Of course, the future is what really matters.

Zhejiang Huahai Pharmaceutical is not owned by hedge funds. The company's CEO Bao Hua Chen is the largest shareholder with 25% of shares outstanding. Ming Hua Zhou is the second largest shareholder owning 15% of common stock, and Rongtong Fund Management Co. Ltd. holds about 1.0% of the company stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 16 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Zhejiang Huahai Pharmaceutical

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 most recent data indicates that insiders own a reasonable proportion of Zhejiang Huahai Pharmaceutical Co., Ltd.. Insiders own CN¥11b worth of shares in the CN¥27b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 44% stake in Zhejiang Huahai Pharmaceutical. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Zhejiang Huahai Pharmaceutical , and understanding them should be part of your investment process.

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.

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.