Zhejiang Shapuaisi Pharmaceutical Co.,Ltd.'s (SHSE:603168) stock price dropped 12% last week; individual investors would not be happy

Key Insights

• Zhejiang Shapuaisi PharmaceuticalLtd's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 7 investors have a majority stake in the company with 51% ownership
• 23% of Zhejiang Shapuaisi PharmaceuticalLtd is held by insiders

If you want to know who really controls Zhejiang Shapuaisi Pharmaceutical Co.,Ltd. (SHSE:603168), then you'll have to look at the makeup of its share registry. With 45% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, individual investors endured the biggest losses as the stock fell by 12%.

In the chart below, we zoom in on the different ownership groups of Zhejiang Shapuaisi PharmaceuticalLtd.

View our latest analysis for Zhejiang Shapuaisi PharmaceuticalLtd

What Does The Institutional Ownership Tell Us About Zhejiang Shapuaisi PharmaceuticalLtd?

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 Shapuaisi PharmaceuticalLtd. 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. 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 Shapuaisi PharmaceuticalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Zhejiang Shapuaisi PharmaceuticalLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Shanghai Yanghe Industrial Co., Ltd. with 21% of shares outstanding. Dekang Chen is the second largest shareholder owning 12% of common stock, and Hongyuan Lin holds about 7.7% of the company stock.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Zhejiang Shapuaisi PharmaceuticalLtd

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 Shapuaisi Pharmaceutical Co.,Ltd.. Insiders own CN¥641m worth of shares in the CN¥2.8b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Shapuaisi PharmaceuticalLtd. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 25%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.