Alibaba Health Information Technology Limited's (HKG:241) market cap dropped HK$7.7b last week; Public companies bore the brunt

Key Insights

• Significant control over Alibaba Health Information Technology by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 64% of the company
• 19% of Alibaba Health Information Technology is held by insiders

Every investor in Alibaba Health Information Technology Limited (HKG:241) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 45% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 8.3% decline in share price, public companies suffered the most losses.

Let's delve deeper into each type of owner of Alibaba Health Information Technology, beginning with the chart below.

Check out our latest analysis for Alibaba Health Information Technology

What Does The Institutional Ownership Tell Us About Alibaba Health Information Technology?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Alibaba Health Information Technology. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Alibaba Health Information Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Alibaba Health Information Technology is not owned by hedge funds. Alibaba Group Holding Limited is currently the company's largest shareholder with 45% of shares outstanding. Wei Bo Feng is the second largest shareholder owning 19% of common stock, and The Vanguard Group, Inc. holds about 1.5% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 64% stake.

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 Alibaba Health Information Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Alibaba Health Information Technology Limited. It is very interesting to see that insiders have a meaningful HK$16b stake in this HK$85b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in Alibaba Health Information Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

Public companies currently own 45% of Alibaba Health Information Technology stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Alibaba Health Information Technology 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 Alibaba Health Information Technology , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.