Luoxin Pharmaceuticals Group Stock Co., Ltd.'s (SZSE:002793) market cap surged CN¥552m last week, retail investors who have a lot riding on the company were rewarded

Key Insights

• Significant control over Luoxin Pharmaceuticals Group Stock by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 8 shareholders
• Insider ownership in Luoxin Pharmaceuticals Group Stock is 12%

Every investor in Luoxin Pharmaceuticals Group Stock Co., Ltd. (SZSE:002793) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, retail investors benefitted the most after the company's market cap rose by CN¥552m last week.

Let's delve deeper into each type of owner of Luoxin Pharmaceuticals Group Stock, beginning with the chart below.

View our latest analysis for Luoxin Pharmaceuticals Group Stock

What Does The Institutional Ownership Tell Us About Luoxin Pharmaceuticals Group Stock?

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 Luoxin Pharmaceuticals Group Stock does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Luoxin Pharmaceuticals Group Stock, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Luoxin Pharmaceuticals Group Stock. The company's largest shareholder is Shandong Luoxin Holdings Co., Ltd, with ownership of 22%. Meanwhile, the second and third largest shareholders, hold 9.4% and 4.4%, of the shares outstanding, respectively.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Luoxin Pharmaceuticals Group Stock

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. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Luoxin Pharmaceuticals Group Stock Co., Ltd.. Insiders have a CN¥560m stake in this CN¥4.7b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Luoxin Pharmaceuticals Group Stock. 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 29%, 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. For example, we've discovered 2 warning signs for Luoxin Pharmaceuticals Group Stock that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.