Key Insights

• Regencell Bioscience Holdings' significant insider ownership suggests inherent interests in company's expansion
• Yat-Gai Au owns 81% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Regencell Bioscience Holdings Limited (NASDAQ:RGC) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 81% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by US$134m last week.

In the chart below, we zoom in on the different ownership groups of Regencell Bioscience Holdings.

What Does The Lack Of Institutional Ownership Tell Us About Regencell Bioscience Holdings?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

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. Alternatively, there might be something about the company that has kept institutional investors away. Regencell Bioscience Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Regencell Bioscience Holdings is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Yat-Gai Au with 81% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. Meanwhile, the second and third largest shareholders, hold 7.6% and 0.05%, of the shares outstanding, respectively.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Regencell Bioscience Holdings

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.

Our information suggests that insiders own more than half of Regencell Bioscience Holdings Limited. This gives them effective control of the company. Given it has a market cap of US$195m, that means they have US$158m worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Regencell Bioscience Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 7.6%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Regencell Bioscience Holdings you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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