Chongqing Lummy Pharmaceutical Co., Ltd.'s (SZSE:300006) last week's 11% decline must have disappointed retail investors who have a significant stake

Key Insights

• Chongqing Lummy Pharmaceutical's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 40% of the business is held by the top 14 shareholders
• 11% of Chongqing Lummy Pharmaceutical is held by insiders

If you want to know who really controls Chongqing Lummy Pharmaceutical Co., Ltd. (SZSE:300006), then you'll have to look at the makeup of its share registry. With 60% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, retail investors endured the biggest losses as the stock fell by 11%.

Let's take a closer look to see what the different types of shareholders can tell us about Chongqing Lummy Pharmaceutical.

Check out our latest analysis for Chongqing Lummy Pharmaceutical

What Does The Institutional Ownership Tell Us About Chongqing Lummy Pharmaceutical?

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 Chongqing Lummy Pharmaceutical 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 Chongqing Lummy Pharmaceutical, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Chongqing Lummy Pharmaceutical. Our data shows that Guangxi Wuzhou Zhongheng Group Co.,Ltd is the largest shareholder with 23% of shares outstanding. Qiu Yu is the second largest shareholder owning 11% of common stock, and Tongde Qianyuan (Beijing) Investment Management Co., Ltd. holds about 2.0% of the company stock.

A deeper look at our ownership data shows that the top 14 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Chongqing Lummy Pharmaceutical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Chongqing Lummy Pharmaceutical Co., Ltd.. Insiders own CN¥292m worth of shares in the CN¥2.6b company. 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

The general public, who are usually individual investors, hold a substantial 60% stake in Chongqing Lummy Pharmaceutical, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Public Company Ownership

Public companies currently own 23% of Chongqing Lummy Pharmaceutical stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Chongqing Lummy Pharmaceutical better, we need to consider many other factors.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.