Jilin Province Huinan Changlong Bio-pharmacy Company Limited's (HKG:8049) last week's 11% decline must have disappointed retail investors who have a significant stake

Key Insights

• Significant control over Jilin Province Huinan Changlong Bio-pharmacy by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 8 investors have a majority stake in the company with 49% ownership
• 35% of Jilin Province Huinan Changlong Bio-pharmacy is held by insiders

Every investor in Jilin Province Huinan Changlong Bio-pharmacy Company Limited (HKG:8049) should be aware of the most powerful shareholder groups. With 51% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 35% shares weren’t spared from last week’s HK$112m market cap drop, retail investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Jilin Province Huinan Changlong Bio-pharmacy.

View our latest analysis for Jilin Province Huinan Changlong Bio-pharmacy

What Does The Lack Of Institutional Ownership Tell Us About Jilin Province Huinan Changlong Bio-pharmacy?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. Jilin Province Huinan Changlong Bio-pharmacy's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Jilin Province Huinan Changlong Bio-pharmacy is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Hong Zhang with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 7.6%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Xiao Guang Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 8 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Jilin Province Huinan Changlong Bio-pharmacy

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.

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 most recent data indicates that insiders own a reasonable proportion of Jilin Province Huinan Changlong Bio-pharmacy Company Limited. It has a market capitalization of just HK$919m, and insiders have HK$318m worth of shares in their own names. 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, mostly comprising of individual investors, collectively holds 51% of Jilin Province Huinan Changlong Bio-pharmacy shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

We can see that Private Companies own 15%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Jilin Province Huinan Changlong Bio-pharmacy better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Jilin Province Huinan Changlong Bio-pharmacy you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.