Key Insights

• Significant control over Shanghai Junshi Biosciences by retail investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 14 shareholders
• Insiders own 20% of Shanghai Junshi Biosciences

If you want to know who really controls Shanghai Junshi Biosciences Co., Ltd. (HKG:1877), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that benefitted the most from last week's HK$729m market cap gain, insiders too had a 20% share in those profits.

In the chart below, we zoom in on the different ownership groups of Shanghai Junshi Biosciences.

What Does The Institutional Ownership Tell Us About Shanghai Junshi Biosciences?

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.

We can see that Shanghai Junshi Biosciences 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. 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 Shanghai Junshi Biosciences' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shanghai Junshi Biosciences. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Shanghai Junshi Biosciences' case, its Top Key Executive, Jun Xiong, is the largest shareholder, holding 13% of shares outstanding. With 11% and 5.7% of the shares outstanding respectively, Loyal Valley Capital and Hillhouse Investment Management, Ltd. are the second and third largest shareholders.

After doing some more digging, we found that the top 14 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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 Shanghai Junshi Biosciences

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 most recent data indicates that insiders own a reasonable proportion of Shanghai Junshi Biosciences Co., Ltd.. Insiders own HK$4.9b worth of shares in the HK$25b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shanghai Junshi Biosciences. 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.

Private Equity Ownership

With an ownership of 17%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Junshi Biosciences better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Shanghai Junshi Biosciences you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.