China Traditional Chinese Medicine Holdings Co. Limited's (HKG:570) market cap surged HK$554m last week, individual investors who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by individual investors in China Traditional Chinese Medicine Holdings indicates that they collectively have a greater say in management and business strategy
• The top 6 shareholders own 50% of the company
• 12% of China Traditional Chinese Medicine Holdings is held by Institutions

If you want to know who really controls China Traditional Chinese Medicine Holdings Co. Limited (HKG:570), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, individual investors benefitted the most after the company's market cap rose by HK$554m last week.

In the chart below, we zoom in on the different ownership groups of China Traditional Chinese Medicine Holdings.

View our latest analysis for China Traditional Chinese Medicine Holdings

What Does The Institutional Ownership Tell Us About China Traditional Chinese Medicine Holdings?

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 China Traditional Chinese Medicine Holdings 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. 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 China Traditional Chinese Medicine Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

China Traditional Chinese Medicine Holdings is not owned by hedge funds. CNSC is currently the largest shareholder, with 32% of shares outstanding. Ping An Insurance (Group) Company of China, Ltd. is the second largest shareholder owning 12% of common stock, and The Vanguard Group, Inc. holds about 2.0% of the company stock.

We did some more digging and found that 6 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of China Traditional Chinese Medicine Holdings

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. 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 note our data does not show any board members holding shares, personally. We do not see this low level of ownership often, and it is possible our data is imperfect. But shareholders can click here to check if insiders have been selling stock.

General Public Ownership

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Traditional Chinese Medicine Holdings. 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 Company Ownership

It seems that Private Companies own 32%, of the China Traditional Chinese Medicine Holdings 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.

Public Company Ownership

It appears to us that public companies own 12% of China Traditional Chinese Medicine Holdings. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China Traditional Chinese Medicine Holdings better, we need to consider many other factors. For example, we've discovered 1 warning sign for China Traditional Chinese Medicine Holdings that you should be aware of before investing here.

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.