Sinopharm Group Co. Ltd.'s (HKG:1099) 3.6% loss last week hit both individual investors who own 57% as well as institutions

Key Insights

• Significant control over Sinopharm Group by private companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is China National Pharmaceutical Group Corporation with a 57% stake
• 27% of Sinopharm Group is held by Institutions

A look at the shareholders of Sinopharm Group Co. Ltd. (HKG:1099) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 27% came under pressure after market cap dropped to HK$63b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Sinopharm Group.

Check out our latest analysis for Sinopharm Group

What Does The Institutional Ownership Tell Us About Sinopharm Group?

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 Sinopharm Group. 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 Sinopharm Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Sinopharm Group. China National Pharmaceutical Group Corporation is currently the largest shareholder, with 57% of shares outstanding. This implies that they have majority interest control of the future of the company. FMR LLC is the second largest shareholder owning 4.8% of common stock, and Lazard Asset Management LLC holds about 3.7% of the company stock.

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 Sinopharm Group

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. 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 Sinopharm Group Co. Ltd. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own HK$3.2m of stock. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sinopharm Group. 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 57%, of the Sinopharm Group 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 Sinopharm Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Sinopharm Group , and understanding them should be part of your investment process.

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.