Bloomage BioTechnology Corporation Limited's (SHSE:688363) market cap dropped CN¥919m last week; Private equity firms bore the brunt

Key Insights

• Bloomage BioTechnology's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• The largest shareholder of the company is Huaxi Xinyu Investment Co., Ltd. with a 59% stake
• 11% of Bloomage BioTechnology is held by Institutions

To get a sense of who is truly in control of Bloomage BioTechnology Corporation Limited (SHSE:688363), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 66% to be precise, is private equity firms. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to CN¥28b last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Bloomage BioTechnology.

View our latest analysis for Bloomage BioTechnology

What Does The Institutional Ownership Tell Us About Bloomage BioTechnology?

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.

We can see that Bloomage BioTechnology does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Bloomage BioTechnology's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Bloomage BioTechnology. The company's largest shareholder is Huaxi Xinyu Investment Co., Ltd., with ownership of 59%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 7.2% of the shares outstanding, followed by an ownership of 3.0% by the third-largest shareholder.

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

Insider Ownership Of Bloomage BioTechnology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that Bloomage BioTechnology Corporation Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. Keep in mind that it's a big company, and the insiders own CN¥205m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Bloomage BioTechnology. 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 Equity Ownership

With an ownership of 66%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Bloomage BioTechnology better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 4 warning signs for Bloomage BioTechnology you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.