Private companies who hold 43% of Charmacy Pharmaceutical Co., Ltd. (HKG:2289) gained 11%, insiders profited as well

Key Insights

• Significant control over Charmacy Pharmaceutical by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 75% of the company
• Insider ownership in Charmacy Pharmaceutical is 32%

A look at the shareholders of Charmacy Pharmaceutical Co., Ltd. (HKG:2289) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 11% price gain, insiders also received a 32% cut.

In the chart below, we zoom in on the different ownership groups of Charmacy Pharmaceutical.

Check out our latest analysis for Charmacy Pharmaceutical

What Does The Lack Of Institutional Ownership Tell Us About Charmacy Pharmaceutical?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Charmacy Pharmaceutical might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Charmacy Pharmaceutical. Looking at our data, we can see that the largest shareholder is Jiangyao Group Co., Ltd. with 43% of shares outstanding. Chuanglong Yao is the second largest shareholder owning 32% of common stock, and Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited holds about 1.0% of the company stock. Chuanglong Yao, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Charmacy Pharmaceutical

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Charmacy Pharmaceutical Co., Ltd.. Insiders own HK$311m worth of shares in the HK$972m company. 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

The general public, who are usually individual investors, hold a 24% stake in Charmacy Pharmaceutical. 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 Company Ownership

It seems that Private Companies own 43%, of the Charmacy Pharmaceutical stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Charmacy Pharmaceutical better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Charmacy Pharmaceutical you should be aware of, and 1 of them doesn't sit too well with us.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.