Key Insights

• Hainan Poly Pharm's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 10 investors have a majority stake in the company with 50% ownership
• 41% of Hainan Poly Pharm is held by insiders

To get a sense of who is truly in control of Hainan Poly Pharm. Co., Ltd (SZSE:300630), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 47% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that benefitted the most from last week's CN¥390m market cap gain, insiders too had a 41% share in those profits.

Let's delve deeper into each type of owner of Hainan Poly Pharm, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Hainan Poly Pharm?

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 Hainan Poly Pharm does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hainan Poly Pharm's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Hainan Poly Pharm. The company's CEO Min Hua Fan is the largest shareholder with 40% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.4% and 1.5%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Hainan Poly Pharm

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 Hainan Poly Pharm. Co., Ltd. Insiders own CN¥3.4b worth of shares in the CN¥8.3b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hainan Poly Pharm. 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 Hainan Poly Pharm better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Hainan Poly Pharm (of which 1 doesn't sit too well with us!) 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.