Private equity firms among HUTCHMED (China) Limited's (LON:HCM) largest stockholders and were hit after last week's 6.7% price drop

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
• The top 6 shareholders own 50% of the company
• 30% of HUTCHMED (China) is held by Institutions

If you want to know who really controls HUTCHMED (China) Limited (LON:HCM), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private equity firms endured the biggest losses as the stock fell by 6.7%.

In the chart below, we zoom in on the different ownership groups of HUTCHMED (China).

View 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.

HUTCHMED (China) is not owned by hedge funds. Hutchison Whampoa (China) Limited is currently the largest shareholder, with 39% of shares outstanding. For context, the second largest shareholder holds about 3.6% of the shares outstanding, followed by an ownership of 2.5% by the third-largest shareholder.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

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. 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.

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 less than 1% of HUTCHMED (China) Limited. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around UK£16m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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 Equity Ownership

Private equity firms hold a 39% stake in HUTCHMED (China). This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.