Key Insights

• Given the large stake in the stock by institutions, RemeGen's stock price might be vulnerable to their trading decisions
• The top 8 shareholders own 51% of the company
• 12% of RemeGen is held by insiders

A look at the shareholders of RemeGen Co., Ltd. (HKG:9995) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

After a year of 33% losses, last week's 10% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher.

In the chart below, we zoom in on the different ownership groups of RemeGen.

What Does The Institutional Ownership Tell Us About RemeGen?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

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. The company's largest shareholder is Yantai Rongda Venture Capital Center (Limited Partnership), with ownership of 19%. Jianmin Fang is the second largest shareholder owning 12% of common stock, and Yantai Rongqian Enterprise Management Center (Limited Partnership) holds about 5.1% of the company stock. 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 8 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of RemeGen

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. 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.

Our information suggests that insiders maintain a significant holding in RemeGen Co., Ltd.. It has a market capitalization of just HK$27b, and insiders have HK$3.4b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over RemeGen. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for RemeGen you should be aware of, and 1 of them shouldn't be ignored.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.