Rainmed Medical Limited's (HKG:2297) most bullish insider is CEO Yunfei Huo, and their holdings value went up by 15% last week

Key Insights

• Rainmed Medical's significant insider ownership suggests inherent interests in company's expansion
• A total of 4 investors have a majority stake in the company with 53% ownership
• Institutional ownership in Rainmed Medical is 14%

To get a sense of who is truly in control of Rainmed Medical Limited (HKG:2297), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 40% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 15% gain.

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

See our latest analysis for Rainmed Medical

What Does The Institutional Ownership Tell Us About Rainmed Medical?

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.

As you can see, institutional investors have a fair amount of stake in Rainmed Medical. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Rainmed Medical, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Rainmed Medical. The company's CEO Yunfei Huo is the largest shareholder with 18% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder.

Our research also brought to light the fact that roughly 53% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Rainmed Medical

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 Rainmed Medical Limited. Insiders own HK$320m worth of shares in the HK$806m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 17%, private equity firms could influence the Rainmed Medical 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

Our data indicates that Private Companies hold 13%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Rainmed Medical (of which 1 shouldn't be ignored!) 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.