Key Insights

• Henan Lingrui Pharmaceutical's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 45% of the business is held by the top 25 shareholders
• Institutions own 25% of Henan Lingrui Pharmaceutical

A look at the shareholders of Henan Lingrui Pharmaceutical Co., Ltd. (SHSE:600285) can tell us which group is most powerful. The group holding the most number of shares in the company, around 52% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 5.0% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 25% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Henan Lingrui Pharmaceutical.

What Does The Institutional Ownership Tell Us About Henan Lingrui Pharmaceutical?

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 Henan Lingrui Pharmaceutical 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. 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 Henan Lingrui Pharmaceutical, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Henan Lingrui Pharmaceutical. Looking at our data, we can see that the largest shareholder is Henan Lingrui Group Co., Ltd. with 22% of shares outstanding. With 4.2% and 4.1% of the shares outstanding respectively, National Council for Social Security Fund and GF Fund Management Co., Ltd. are the second and third largest shareholders. Additionally, the company's CEO Wei Xiong directly holds 0.6% of the total shares outstanding.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Henan Lingrui Pharmaceutical

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in Henan Lingrui Pharmaceutical Co., Ltd.. This is a big company, so it is good to see this level of alignment. Insiders own CN¥185m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 52% stake in Henan Lingrui Pharmaceutical, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 22%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the 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 instance, we've identified 1 warning sign for Henan Lingrui Pharmaceutical that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com