HUTCHMED (China) Limited's (LON:HCM) last week's 8.4% decline must have disappointed private equity firms who have a significant stake

Key Insights

• The considerable ownership by private equity firms in HUTCHMED (China) indicates that they collectively have a greater say in management and business strategy
• A total of 8 investors have a majority stake in the company with 50% ownership
• Institutional ownership in HUTCHMED (China) is 27%

Every investor in HUTCHMED (China) Limited (LON:HCM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to UK£2.7b last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about HUTCHMED (China).

See our latest analysis for HUTCHMED (China)

What Does The Institutional Ownership Tell Us About HUTCHMED (China)?

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 HUTCHMED (China). 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at HUTCHMED (China)'s earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in HUTCHMED (China). Our data shows that Hutchison Whampoa (China) Limited is the largest shareholder with 39% of shares outstanding. M&G Securities Limited is the second largest shareholder owning 2.5% of common stock, and General Atlantic Service Company, L.P. holds about 2.3% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of HUTCHMED (China)

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in HUTCHMED (China) Limited. The insiders have a meaningful stake worth UK£31m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in HUTCHMED (China). While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 39%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for HUTCHMED (China) you should know about.

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.