Key Insights

• Given the large stake in the stock by institutions, RemeGen's stock price might be vulnerable to their trading decisions
• A total of 7 investors have a majority stake in the company with 50% ownership
• Insider ownership in RemeGen is 16%

To get a sense of who is truly in control of RemeGen Co., Ltd. (HKG:9995), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 37% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors would appreciate the 15% increase in share price last week, given their one-year losses have totalled a disappointing 67%.

Let's take a closer look to see what the different types of shareholders can tell us about RemeGen.

What Does The Institutional Ownership Tell Us About RemeGen?

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 RemeGen does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see RemeGen's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in RemeGen. Yantai Rongda Venture Capital Center (Limited Partnership) is currently the company's largest shareholder with 19% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 5.1% by the third-largest shareholder. Jianmin Fang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

We did some more digging and found that 7 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of RemeGen

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of RemeGen Co., Ltd.. Insiders own HK$2.0b worth of shares in the HK$13b 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

The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. 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 Company Ownership

We can see that Private Companies own 21%, of the shares on issue. 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 RemeGen better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for RemeGen (of which 1 is a bit concerning!) you should know about.

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.