Chief Compliance Officer Xiaolin Liu, China Biotech Services Holdings Limited's (HKG:8037) largest shareholder sees value of holdings go down 17% after recent drop

Key Insights

• Insiders appear to have a vested interest in China Biotech Services Holdings' growth, as seen by their sizeable ownership
• 54% of the company is held by a single shareholder (Xiaolin Liu)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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Every investor in China Biotech Services Holdings Limited (HKG:8037) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 64% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders as a group endured the highest losses after market cap fell by HK$156m.

Let's take a closer look to see what the different types of shareholders can tell us about China Biotech Services Holdings.

View our latest analysis for China Biotech Services Holdings

What Does The Lack Of Institutional Ownership Tell Us About China Biotech Services Holdings?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. China Biotech Services Holdings 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 China Biotech Services Holdings. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In China Biotech Services Holdings' case, its Chief Compliance Officer, Xiaolin Liu, is the largest shareholder, holding 54% of shares outstanding. Meanwhile, the second largest shareholder is Chun-Shun Ko holding 9.8%.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 China Biotech Services Holdings

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.

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.

It seems that insiders own more than half the China Biotech Services Holdings Limited stock. This gives them a lot of power. That means they own HK$501m worth of shares in the HK$781m company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Biotech Services Holdings. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for China Biotech Services Holdings (of which 2 are concerning!) you should know about.

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.