Individual investors invested in Hebei Changshan Biochemical Pharmaceutical Co., Ltd. (SZSE:300255) up 9.1% last week, insiders too were rewarded

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 25 shareholders own 48% of the company
• Insider ownership in Hebei Changshan Biochemical Pharmaceutical is 37%

A look at the shareholders of Hebei Changshan Biochemical Pharmaceutical Co., Ltd. (SZSE:300255) can tell us which group is most powerful. The group holding the most number of shares in the company, around 52% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s CN¥1.7b market cap gain, insiders too had a 37% share in those profits.

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

See our latest analysis for Hebei Changshan Biochemical Pharmaceutical

What Does The Institutional Ownership Tell Us About Hebei Changshan Biochemical 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.

Less than 5% of Hebei Changshan Biochemical Pharmaceutical is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hebei Changshan Biochemical Pharmaceutical is not owned by hedge funds. Shu Gao is currently the company's largest shareholder with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.0% and 4.8% of the stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Hebei Changshan Biochemical Pharmaceutical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Hebei Changshan Biochemical Pharmaceutical Co., Ltd.. Insiders own CN¥7.4b worth of shares in the CN¥20b company. That's quite meaningful. 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 52% of Hebei Changshan Biochemical 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 a stake of 5.0%, private equity firms could influence the Hebei Changshan Biochemical Pharmaceutical board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it 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. Be aware that Hebei Changshan Biochemical Pharmaceutical is showing 3 warning signs in our investment analysis , you should know about...

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.