Key Insights

• The considerable ownership by retail investors in Zhejiang Huakang Pharmaceutical indicates that they collectively have a greater say in management and business strategy
• The top 12 shareholders own 50% of the company
• Insider ownership in Zhejiang Huakang Pharmaceutical is 41%

Every investor in Zhejiang Huakang Pharmaceutical Co., Ltd. (SHSE:605077) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 43% 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 7.7% increase in the stock price last week, retail investors profited the most, but insiders who own 41% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Zhejiang Huakang Pharmaceutical.

What Does The Institutional Ownership Tell Us About Zhejiang Huakang Pharmaceutical?

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.

Since institutions own only a small portion of Zhejiang Huakang Pharmaceutical, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Zhejiang Huakang Pharmaceutical. Looking at our data, we can see that the largest shareholder is the CEO Deshui Chen with 16% of shares outstanding. Fujian Yake Food Co. Ltd is the second largest shareholder owning 6.1% of common stock, and Xinping Cheng holds about 5.6% of the company stock. Interestingly, the third-largest shareholder, Xinping Cheng is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 12 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Zhejiang Huakang 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.

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.

It seems insiders own a significant proportion of Zhejiang Huakang Pharmaceutical Co., Ltd.. Insiders own CN¥2.2b worth of shares in the CN¥5.4b 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

With a 43% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Huakang Pharmaceutical. 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

It seems that Private Companies own 12%, of the Zhejiang Huakang Pharmaceutical 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Zhejiang Huakang Pharmaceutical is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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.