Institutions along with individual investors who hold considerable shares inInnoCare Pharma Limited (HKG:9969) come under pressure; lose 6.2% of holdings value

Key Insights

• The considerable ownership by individual investors in InnoCare Pharma indicates that they collectively have a greater say in management and business strategy
• The top 12 shareholders own 51% of the company
• 21% of InnoCare Pharma is held by insiders

A look at the shareholders of InnoCare Pharma Limited (HKG:9969) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 38% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 24% came under pressure after market cap dropped to HK$11b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of InnoCare Pharma.

View our latest analysis for InnoCare Pharma

What Does The Institutional Ownership Tell Us About InnoCare Pharma?

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.

We can see that InnoCare Pharma does have institutional investors; and they hold a good portion of the company's stock. 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 InnoCare Pharma's historic earnings and revenue below, but keep in mind there's always more to the story.

It would appear that 12% of InnoCare Pharma shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that HHLR Advisors, Ltd. is the largest shareholder with 12% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.9% and 6.5% of the stock. Renbin Zhao, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. In addition, we found that Jisong Cui, the CEO has 5.7% of the shares allocated to their name.

After doing some more digging, we found that the top 12 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of InnoCare Pharma

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our most recent data indicates that insiders own a reasonable proportion of InnoCare Pharma Limited. Insiders own HK$2.4b worth of shares in the HK$11b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in InnoCare Pharma. 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 4.7%, of the InnoCare Pharma stock. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for InnoCare Pharma that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.