Hangzhou Bio-Sincerity Pharma-Tech Co.,Ltd.'s (SZSE:301096) last week's 9.7% decline must have disappointed retail investors who have a significant stake

Key Insights

• Hangzhou Bio-Sincerity Pharma-TechLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 11 shareholders own 50% of the company
• Insider ownership in Hangzhou Bio-Sincerity Pharma-TechLtd is 35%

Every investor in Hangzhou Bio-Sincerity Pharma-Tech Co.,Ltd. (SZSE:301096) should be aware of the most powerful shareholder groups. With 37% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 9.7% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 35% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Hangzhou Bio-Sincerity Pharma-TechLtd.

Check out our latest analysis for Hangzhou Bio-Sincerity Pharma-TechLtd

What Does The Institutional Ownership Tell Us About Hangzhou Bio-Sincerity Pharma-TechLtd?

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 Hangzhou Bio-Sincerity Pharma-TechLtd. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hangzhou Bio-Sincerity Pharma-TechLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Hangzhou Bio-Sincerity Pharma-TechLtd. The company's largest shareholder is Chunneng Shao, with ownership of 19%. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 3.4% by the third-largest shareholder. Jinfang Lou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 50% implying that 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Hangzhou Bio-Sincerity Pharma-TechLtd

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 most recent data indicates that insiders own a reasonable proportion of Hangzhou Bio-Sincerity Pharma-Tech Co.,Ltd.. It has a market capitalization of just CN¥3.9b, and insiders have CN¥1.4b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 37% stake in Hangzhou Bio-Sincerity Pharma-TechLtd. 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

It seems that Private Companies own 14%, of the Hangzhou Bio-Sincerity Pharma-TechLtd stock. 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 Hangzhou Bio-Sincerity Pharma-TechLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hangzhou Bio-Sincerity Pharma-TechLtd (at least 1 which is concerning) , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.