Hebei Changshan Biochemical Pharmaceutical Co., Ltd. (SZSE:300255) surges 8.7%; individual investors who own 51% shares profited along with insiders

Key Insights

• Significant control over Hebei Changshan Biochemical Pharmaceutical by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 23 shareholders own 49% of the company
• 38% of Hebei Changshan Biochemical Pharmaceutical is held by insiders

Every investor in Hebei Changshan Biochemical Pharmaceutical Co., Ltd. (SZSE:300255) should be aware of the most powerful shareholder groups. With 51% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 8.7% increase in the stock price last week, individual investors profited the most, but insiders who own 38% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Hebei Changshan Biochemical Pharmaceutical.

View our latest analysis for Hebei Changshan Biochemical Pharmaceutical

What Does The Institutional Ownership Tell Us About Hebei Changshan Biochemical Pharmaceutical?

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.

Since institutions own only a small portion of Hebei Changshan Biochemical Pharmaceutical, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hebei Changshan Biochemical Pharmaceutical is not owned by hedge funds. The company's largest shareholder is Shu Gao, with ownership of 31%. In comparison, the second and third largest shareholders hold about 5.8% and 5.0% of the stock.

A deeper look at our ownership data shows that the top 23 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. 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 Hebei Changshan Biochemical 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.

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 information suggests that insiders maintain a significant holding in Hebei Changshan Biochemical Pharmaceutical Co., Ltd.. It is very interesting to see that insiders have a meaningful CN¥3.8b stake in this CN¥9.9b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. 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 51% stake in Hebei Changshan Biochemical Pharmaceutical, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With a stake of 5.0%, private equity firms could influence the Hebei Changshan Biochemical Pharmaceutical board. 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 Hebei Changshan Biochemical Pharmaceutical better, we need to consider many other factors. Take risks for example - Hebei Changshan Biochemical Pharmaceutical has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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.

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