Lee's Pharmaceutical Holdings Limited's (HKG:950) market cap surged HK$130m last week, private companies who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by private companies in Lee's Pharmaceutical Holdings indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 50% of the company
• Recent sales by insiders

If you want to know who really controls Lee's Pharmaceutical Holdings Limited (HKG:950), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 41% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies collectively scored the highest last week as the company hit HK$842m market cap following a 18% gain in the stock.

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

Check out our latest analysis for Lee's Pharmaceutical Holdings

What Does The Institutional Ownership Tell Us About Lee's Pharmaceutical Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Lee's Pharmaceutical Holdings. 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. 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 Lee's Pharmaceutical Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Lee's Pharmaceutical Holdings is not owned by hedge funds. Huby Technology Limited is currently the company's largest shareholder with 19% of shares outstanding. With 12% and 9.7% of the shares outstanding respectively, Apta Finance S.A. and Xiaoyi Li are the second and third largest shareholders. Xiaoyi Li, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

To make our study more interesting, we found that the top 4 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Lee's Pharmaceutical Holdings

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Lee's Pharmaceutical Holdings Limited. Insiders own HK$95m worth of shares in the HK$842m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Lee's Pharmaceutical Holdings. 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

Private equity firms hold a 9.3% stake in Lee's Pharmaceutical Holdings. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 41%, of the shares on issue. 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 Lee's Pharmaceutical Holdings better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Lee's Pharmaceutical Holdings you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.