Key Insights

• Tonghua Golden-Horse Pharmaceutical Industry CoLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 25 investors have a majority stake in the company with 42% ownership
• Insiders own 27% of Tonghua Golden-Horse Pharmaceutical Industry CoLtd

To get a sense of who is truly in control of Tonghua Golden-Horse Pharmaceutical Industry Co,Ltd (SZSE:000766), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 58% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 3.9% increase in the stock price last week, retail investors profited the most, but insiders who own 27% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Tonghua Golden-Horse Pharmaceutical Industry CoLtd.

What Does The Institutional Ownership Tell Us About Tonghua Golden-Horse Pharmaceutical Industry CoLtd?

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.

Tonghua Golden-Horse Pharmaceutical Industry CoLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Tonghua Golden-Horse Pharmaceutical Industry CoLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Tonghua Golden-Horse Pharmaceutical Industry CoLtd. Looking at our data, we can see that the largest shareholder is Lanjun Yu with 20% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.1% and 3.4% of the stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Tonghua Golden-Horse Pharmaceutical Industry CoLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Tonghua Golden-Horse Pharmaceutical Industry Co,Ltd. It has a market capitalization of just CN¥14b, and insiders have CN¥3.8b worth of shares in their own names. That's quite significant. 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, mostly comprising of individual investors, collectively holds 58% of Tonghua Golden-Horse Pharmaceutical Industry CoLtd shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 6.2%, of the Tonghua Golden-Horse Pharmaceutical Industry CoLtd stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Tonghua Golden-Horse Pharmaceutical Industry CoLtd you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.