Insiders hold 55% of Grand Pharmaceutical Group Limited (HKG:512), and they've been buying recently

Key Insights

• Grand Pharmaceutical Group's significant insider ownership suggests inherent interests in company's expansion
• 56% of the company is held by a single shareholder (Hu Kaijun)
• Insiders have been buying lately

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To get a sense of who is truly in control of Grand Pharmaceutical Group Limited (HKG:512), it is important to understand the ownership structure of the business. With 55% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

It's interesting to note that insiders have been buying shares recently. This could be interpreted as insiders anticipating a rise in stock prices in the near future.

Let's delve deeper into each type of owner of Grand Pharmaceutical Group, beginning with the chart below.

See our latest analysis for Grand Pharmaceutical Group

What Does The Institutional Ownership Tell Us About Grand Pharmaceutical Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Grand Pharmaceutical Group. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Grand Pharmaceutical Group's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Grand Pharmaceutical Group. Our data shows that Hu Kaijun is the largest shareholder with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 8.9% and 2.5% of the stock.

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. 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 Grand Pharmaceutical Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 information suggests that insiders own more than half of Grand Pharmaceutical Group Limited. This gives them effective control of the company. Given it has a market cap of HK$28b, that means insiders have a whopping HK$16b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Grand Pharmaceutical Group. 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

Private equity firms hold a 8.7% stake in Grand Pharmaceutical Group. This suggests they can be influential in key policy decisions. 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.

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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Grand Pharmaceutical Group you should know about.

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.