While institutions invested in 3SBio Inc. (HKG:1530) benefited from last week's 6.9% gain, individual investors stood to gain the most

Key Insights

• Significant control over 3SBio by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 48% ownership
• Institutions own 24% of 3SBio

A look at the shareholders of 3SBio Inc. (HKG:1530) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that reaped the most benefits after last week’s 6.9% price gain, institutions also received a 24% cut.

Let's take a closer look to see what the different types of shareholders can tell us about 3SBio.

View our latest analysis for 3SBio

What Does The Institutional Ownership Tell Us About 3SBio?

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.

3SBio already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at 3SBio's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in 3SBio. Looking at our data, we can see that the largest shareholder is Century Sunshine Limited with 20% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 3.6% of common stock, and The Vanguard Group, Inc. holds about 3.0% of the company stock. Furthermore, CEO Jing Lou is the owner of 2.1% of the company's shares.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of 3SBio

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own some shares in 3SBio Inc.. The insiders have a meaningful stake worth HK$848m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 47% stake in the company, and hence can't easily be ignored. 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 22%, of the 3SBio 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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.