Private companies invested in Beijing Biostar Pharmaceuticals Co., Ltd. (HKG:2563) copped the brunt of last week's HK$251m market cap decline

Key Insights

• The considerable ownership by private companies in Beijing Biostar Pharmaceuticals indicates that they collectively have a greater say in management and business strategy
• A total of 5 investors have a majority stake in the company with 52% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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To get a sense of who is truly in control of Beijing Biostar Pharmaceuticals Co., Ltd. (HKG:2563), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by HK$251m.

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

See our latest analysis for Beijing Biostar Pharmaceuticals

What Does The Institutional Ownership Tell Us About Beijing Biostar Pharmaceuticals?

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.

We can see that Beijing Biostar Pharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. 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 Beijing Biostar Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Beijing Biostar Pharmaceuticals. Beijing Biostar Pharmaceuticals Co., Ltd, ESOP is currently the company's largest shareholder with 16% of shares outstanding. With 11% and 9.5% of the shares outstanding respectively, Baygen QT Inc and Tibet Xinsheng Deyuan Venture Capital Management Co., Ltd are the second and third largest shareholders.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Beijing Biostar Pharmaceuticals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

We can report that insiders do own shares in Beijing Biostar Pharmaceuticals Co., Ltd.. It has a market capitalization of just HK$1.6b, and insiders have HK$106m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Beijing Biostar Pharmaceuticals. 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 an ownership of 15%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 31%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Beijing Biostar Pharmaceuticals better, we need to consider many other factors.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.