Hainan Huluwa Pharmaceutical Group Co., Ltd. (SHSE:605199) CEO Jinping Liu's holdings dropped 16% in value as a result of the recent pullback

Key Insights

• Significant insider control over Hainan Huluwa Pharmaceutical Group implies vested interests in company growth
• 56% of the business is held by the top 2 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Hainan Huluwa Pharmaceutical Group Co., Ltd. (SHSE:605199), 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 insiders with 42% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 16% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Hainan Huluwa Pharmaceutical Group.

See our latest analysis for Hainan Huluwa Pharmaceutical Group

What Does The Lack Of Institutional Ownership Tell Us About Hainan Huluwa Pharmaceutical Group?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Hainan Huluwa Pharmaceutical Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Hainan Huluwa Pharmaceutical Group. The company's CEO Jinping Liu is the largest shareholder with 42% of shares outstanding. In comparison, the second and third largest shareholders hold about 14% and 6.9% of the stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hainan Huluwa Pharmaceutical Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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.

It seems insiders own a significant proportion of Hainan Huluwa Pharmaceutical Group Co., Ltd.. Insiders own CN¥2.7b worth of shares in the CN¥6.4b company. 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-- including retail investors -- own 36% 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.

Private Company Ownership

We can see that Private Companies own 21%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Hainan Huluwa Pharmaceutical Group better, we need to consider many other factors. For example, we've discovered 5 warning signs for Hainan Huluwa Pharmaceutical Group (2 make us uncomfortable!) that you should be aware of before investing here.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.