Individual investors account for 59% of Tonghua Golden-Horse Pharmaceutical Industry Co,Ltd's (SZSE:000766) ownership, while insiders account for 27%

Key Insights

• Significant control over Tonghua Golden-Horse Pharmaceutical Industry CoLtd by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 41% of the company
• 27% of Tonghua Golden-Horse Pharmaceutical Industry CoLtd is held by insiders

To get a sense of who is truly in control of Tonghua Golden-Horse Pharmaceutical Industry Co,Ltd (SZSE:000766), it is important to understand the ownership structure of the business. With 59% stake, individual investors 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).

And individual insiders on the other hand have a 27% ownership in the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

In the chart below, we zoom in on the different ownership groups of Tonghua Golden-Horse Pharmaceutical Industry CoLtd.

Check out our latest analysis for Tonghua Golden-Horse Pharmaceutical Industry CoLtd

What Does The Institutional Ownership Tell Us About Tonghua Golden-Horse Pharmaceutical Industry CoLtd?

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 Tonghua Golden-Horse Pharmaceutical Industry CoLtd 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 Tonghua Golden-Horse Pharmaceutical Industry CoLtd's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Tonghua Golden-Horse Pharmaceutical Industry CoLtd. Lanjun Yu is currently the largest shareholder, with 20% of shares outstanding. Soochow Securities Co., Ltd., Asset Management Arm is the second largest shareholder owning 4.1% of common stock, and Shanghai Mukai Trading Co., Ltd. holds about 3.4% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Tonghua Golden-Horse Pharmaceutical Industry CoLtd

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.

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 information suggests that insiders maintain a significant holding in Tonghua Golden-Horse Pharmaceutical Industry Co,Ltd. It has a market capitalization of just CN¥15b, and insiders have CN¥4.0b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 59% of Tonghua Golden-Horse Pharmaceutical Industry CoLtd. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 6.2%, of the Tonghua Golden-Horse Pharmaceutical Industry CoLtd stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Tonghua Golden-Horse Pharmaceutical Industry CoLtd you should be aware of.

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.