Every investor in Shaanxi Meibang Pharmaceutical Group Co., Ltd. (SHSE:605033) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don't tell me what you think, tell me what you have in your portfolio.

Shaanxi Meibang Pharmaceutical Group is not a large company by global standards. It has a market capitalization of CN¥3.3b, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own many shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Shaanxi Meibang Pharmaceutical Group.

View our latest analysis for Shaanxi Meibang Pharmaceutical Group

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

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

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. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Shaanxi Meibang Pharmaceutical Group, for yourself, below.

Hedge funds don't have many shares in Shaanxi Meibang Pharmaceutical Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Shaanxi Meibang Pharmaceutical Group's case, its Senior Key Executive, Shaowu Zhang, is the largest shareholder, holding 46% of shares outstanding. The second and third largest shareholders are Shaanxi Tongmei Industrial Co., Ltd. and Tong Zhang, with an equal amount of shares to their name at 6.7%. Interestingly, the third-largest shareholder, Tong Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

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. 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.

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 the majority of Shaanxi Meibang Pharmaceutical Group Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥1.9b stake in this CN¥3.3b business. 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

The general public, who are usually individual investors, hold a 28% stake in Shaanxi Meibang Pharmaceutical Group. 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 13%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shaanxi Meibang Pharmaceutical Group better, we need to consider many other factors. Take risks for example - Shaanxi Meibang Pharmaceutical Group has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.