Key Insights

• Insiders appear to have a vested interest in Zhejiang Ausun Pharmaceutical's growth, as seen by their sizeable ownership
• The largest shareholder of the company is Zhiguo Zheng with a 71% stake
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Zhejiang Ausun Pharmaceutical Co., Ltd. (SHSE:603229), 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 individual insiders with 73% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 6.7% decline in share price, insiders suffered the most losses.

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

What Does The Institutional Ownership Tell Us About Zhejiang Ausun 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.

Zhejiang Ausun Pharmaceutical already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Zhejiang Ausun Pharmaceutical's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Zhejiang Ausun Pharmaceutical. With a 71% stake, CEO Zhiguo Zheng is the largest shareholder. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. Meanwhile, the second and third largest shareholders, hold 2.1% and 1.9%, 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Zhejiang Ausun Pharmaceutical

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders own more than half of Zhejiang Ausun Pharmaceutical Co., Ltd.. This gives them effective control of the company. Given it has a market cap of CN¥5.8b, that means they have CN¥4.2b 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-- including retail investors -- own 19% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Zhejiang Ausun Pharmaceutical better, we need to consider many other factors. For example, we've discovered 1 warning sign for Zhejiang Ausun Pharmaceutical that you should be aware of before investing here.

Of course this may not be the best stock to buy. So take a peek at this free 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.