Key Insights

• Significant control over InnoCare Pharma by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 10 shareholders
• 23% of InnoCare Pharma is held by insiders

If you want to know who really controls InnoCare Pharma Limited (HKG:9969), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 37% 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 23% came under pressure after market cap dropped to HK$13b last week,retail investors took the most losses.

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

What Does The Institutional Ownership Tell Us About InnoCare Pharma?

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 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. 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 InnoCare Pharma, (below). Of course, keep in mind that there are other factors to consider, too.

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. HHLR Advisors, Ltd. is currently the company's largest shareholder with 12% of shares outstanding. Chan Pang Kee is the second largest shareholder owning 8.9% of common stock, and Renbin Zhao holds about 8.2% of the company stock. Renbin Zhao, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Additionally, the company's CEO Jisong Cui directly holds 5.7% of the total shares outstanding.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of InnoCare Pharma

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. 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.

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.

It seems insiders own a significant proportion of InnoCare Pharma Limited. Insiders own HK$3.0b worth of shares in the HK$13b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 37% stake in InnoCare Pharma. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 4.7%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand InnoCare Pharma better, we need to consider many other factors. 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.