Following recent decline, Wenzhou Kangning Hospital Co., Ltd.'s (HKG:2120) top shareholder Top Key Executive Weili Guan sees holdings value drop by 11%

Key Insights

• Wenzhou Kangning Hospital's significant insider ownership suggests inherent interests in company's expansion
• The top 5 shareholders own 53% of the company
• 12% of Wenzhou Kangning Hospital is held by Institutions

To get a sense of who is truly in control of Wenzhou Kangning Hospital Co., Ltd. (HKG:2120), it is important to understand the ownership structure of the business. With 38% stake, individual insiders 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).

And last week, insiders endured the biggest losses as the stock fell by 11%.

Let's take a closer look to see what the different types of shareholders can tell us about Wenzhou Kangning Hospital.

See our latest analysis for Wenzhou Kangning Hospital

What Does The Institutional Ownership Tell Us About Wenzhou Kangning Hospital?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Wenzhou Kangning Hospital does have institutional investors; and they hold a good portion of the company's stock. 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 Wenzhou Kangning Hospital, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Wenzhou Kangning Hospital. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Wenzhou Kangning Hospital's case, its Top Key Executive, Weili Guan, is the largest shareholder, holding 25% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 10% and 6.1%, of the shares outstanding, respectively. Additionally, the company's CEO Lianyue Wang directly holds 5.0% of the total shares outstanding.

On looking further, we found that 53% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Wenzhou Kangning Hospital

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

It seems insiders own a significant proportion of Wenzhou Kangning Hospital Co., Ltd.. It has a market capitalization of just HK$895m, and insiders have HK$337m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Wenzhou Kangning Hospital. 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.

Private Equity Ownership

With a stake of 16%, private equity firms could influence the Wenzhou Kangning Hospital board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 16%, of the Wenzhou Kangning Hospital stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Wenzhou Kangning Hospital has 2 warning signs (and 1 which is potentially serious) we think you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.