Changchun BCHT Biotechnology Co.'s (SHSE:688276) market cap dropped CN¥720m last week; Public companies bore the brunt

Key Insights

• Significant control over Changchun BCHT Biotechnology by public companies implies that the general public has more power to influence management and governance-related decisions
• 67% of the business is held by the top 2 shareholders
• 32% of Changchun BCHT Biotechnology is held by insiders

A look at the shareholders of Changchun BCHT Biotechnology Co. (SHSE:688276) can tell us which group is most powerful. With 41% stake, public companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders, who own 32% shares weren’t spared from last week’s CN¥720m market cap drop, public companies as a group suffered the maximum losses

Let's delve deeper into each type of owner of Changchun BCHT Biotechnology, beginning with the chart below.

See our latest analysis for Changchun BCHT Biotechnology

What Does The Institutional Ownership Tell Us About Changchun BCHT Biotechnology?

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 Changchun BCHT Biotechnology 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 Changchun BCHT Biotechnology's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Changchun BCHT Biotechnology. Our data shows that Changchun High-Tech Industry (Group) Co., Ltd. is the largest shareholder with 41% of shares outstanding. In comparison, the second and third largest shareholders hold about 25% and 5.1% of the stock. Wei Kong, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Changchun BCHT Biotechnology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems insiders own a significant proportion of Changchun BCHT Biotechnology Co.. It has a market capitalization of just CN¥8.8b, and insiders have CN¥2.8b worth of shares in their own names. That's quite significant. 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 17% stake in Changchun BCHT Biotechnology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 41% of Changchun BCHT Biotechnology stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Changchun BCHT Biotechnology (of which 1 is a bit unpleasant!) 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.