Key Insights

• Significant insider control over Shaanxi Meibang Pharmaceutical Group implies vested interests in company growth
• 53% of the business is held by the top 2 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Shaanxi Meibang Pharmaceutical Group Co., Ltd. (SHSE:605033), then you'll have to look at the makeup of its share registry. With 58% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 18% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of Shaanxi Meibang Pharmaceutical Group, beginning with the chart below.

What Does The Lack Of Institutional Ownership Tell Us About Shaanxi Meibang Pharmaceutical Group?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Shaanxi Meibang Pharmaceutical Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Shaanxi Meibang Pharmaceutical Group is not owned by hedge funds. Shaowu Zhang is currently the largest shareholder, with 46% of shares outstanding. The second and third largest shareholders are Tong Zhang and Shaanxi Tongmei Industrial Co., Ltd., with an equal amount of shares to their name at 6.7%. Tong Zhang, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Shaanxi Meibang Pharmaceutical Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own the majority of Shaanxi Meibang Pharmaceutical Group Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥1.1b stake in this CN¥1.9b business. 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 29% 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

It seems that Private Companies own 13%, of the Shaanxi Meibang Pharmaceutical Group stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 2 warning signs for Shaanxi Meibang Pharmaceutical Group you should know about.

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.