Retail investors who have a significant stake must be disappointed along with institutions after Clover Biopharmaceuticals, Ltd.'s (HKG:2197) market cap dropped by HK$91m

Key Insights

• The considerable ownership by retail investors in Clover Biopharmaceuticals indicates that they collectively have a greater say in management and business strategy
• A total of 7 investors have a majority stake in the company with 52% ownership
• Insiders have bought recently

If you want to know who really controls Clover Biopharmaceuticals, Ltd. (HKG:2197), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 22% came under pressure after market cap dropped to HK$790m last week,retail investors took the most losses.

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

Check out our latest analysis for Clover Biopharmaceuticals

What Does The Institutional Ownership Tell Us About Clover Biopharmaceuticals?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Clover Biopharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Clover Biopharmaceuticals' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Clover Biopharmaceuticals. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Clover Biopharmaceuticals' case, its Top Key Executive, Peng Liang, is the largest shareholder, holding 16% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 5.4% of the stock. Furthermore, CEO Joshua G. Liang is the owner of 1.6% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Clover Biopharmaceuticals

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.

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 information suggests that insiders maintain a significant holding in Clover Biopharmaceuticals, Ltd.. Insiders own HK$158m worth of shares in the HK$790m 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, who are usually individual investors, hold a 35% stake in Clover Biopharmaceuticals. 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 13%, 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

We can see that Private Companies own 5.5%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Clover Biopharmaceuticals (at least 4 which are concerning) , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.