Retail investors are Huaren Pharmaceutical Co., Ltd.'s (SZSE:300110) biggest owners and were rewarded after market cap rose by CN¥378m last week

Key Insights

• The considerable ownership by retail investors in Huaren Pharmaceutical indicates that they collectively have a greater say in management and business strategy
• A total of 21 investors have a majority stake in the company with 41% ownership
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Huaren Pharmaceutical Co., Ltd. (SZSE:300110), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 59% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors were the biggest beneficiaries of last week’s 9.9% gain.

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

View our latest analysis for Huaren Pharmaceutical

What Does The Institutional Ownership Tell Us About Huaren 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.

As you can see, institutional investors have a fair amount of stake in Huaren Pharmaceutical. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Huaren Pharmaceutical's historic earnings and revenue below, but keep in mind there's always more to the story.

Huaren Pharmaceutical is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Xi'an Qujiang Culture Financial Holdings Co., Ltd. with 20% of shares outstanding. The second and third largest shareholders are Hongta Innovation Investment Co., Ltd. and Huaren Century Group Co., Ltd., with an equal amount of shares to their name at 7.7%.

A deeper look at our ownership data shows that the top 21 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 Huaren Pharmaceutical

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 data suggests that insiders own under 1% of Huaren Pharmaceutical Co., Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It seems the board members have no more than CN¥5.3m worth of shares in the CN¥4.2b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public -- including retail investors -- own 59% of Huaren Pharmaceutical. 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.

Private Equity Ownership

With an ownership of 7.7%, 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.

Private Company Ownership

Our data indicates that Private Companies hold 28%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Huaren 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.

Of course this may not be the best stock to buy. So take a peek at this free 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.