Mabpharm Limited (HKG:2181) insiders, who hold 50% of the firm would be disappointed by the recent pullback

Key Insights

• Insiders appear to have a vested interest in Mabpharm's growth, as seen by their sizeable ownership
• 68% of the business is held by the top 2 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Mabpharm Limited (HKG:2181), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 16% decline in share price, insiders suffered the most losses.

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

See our latest analysis for Mabpharm

What Does The Lack Of Institutional Ownership Tell Us About Mabpharm?

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

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Mabpharm, for yourself, below.

We note that hedge funds don't have a meaningful investment in Mabpharm. Jianjun Guo is currently the company's largest shareholder with 50% of shares outstanding. CDH Investment Management Company Limited is the second largest shareholder owning 18% of common stock, and Fortune Healthy Investment Limited holds about 5.2% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Mabpharm

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.

Our information suggests that insiders maintain a significant holding in Mabpharm Limited. Insiders own HK$608m worth of shares in the HK$1.2b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Mabpharm. 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 an ownership of 23%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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 4.0%, of the Mabpharm 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:

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. For instance, we've identified 1 warning sign for Mabpharm that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.