Retail investors are Jilin Province Huinan Changlong Bio-pharmacy Company Limited's (HKG:8049) biggest owners and were hit after market cap dropped HK$106m

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
• 49% of the business is held by the top 8 shareholders
• Insiders own 35% of Jilin Province Huinan Changlong Bio-pharmacy

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To get a sense of who is truly in control of Jilin Province Huinan Changlong Bio-pharmacy Company Limited (HKG:8049), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 11% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 35% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Jilin Province Huinan Changlong Bio-pharmacy.

Check out 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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Jilin Province Huinan Changlong Bio-pharmacy might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Jilin Province Huinan Changlong Bio-pharmacy. The company's CEO Hong Zhang is the largest shareholder with 18% of shares outstanding. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 7.6% by the third-largest shareholder. 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.

Our studies suggest that the top 8 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Jilin Province Huinan Changlong Bio-pharmacy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our information suggests that insiders maintain a significant holding in Jilin Province Huinan Changlong Bio-pharmacy Company Limited. It has a market capitalization of just HK$868m, and insiders have HK$301m 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, who are usually individual investors, hold a substantial 51% stake in Jilin Province Huinan Changlong Bio-pharmacy, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

It seems that Private Companies own 15%, of the Jilin Province Huinan Changlong Bio-pharmacy 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Jilin Province Huinan Changlong Bio-pharmacy that 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.