The big shareholder groups in Winner Medical Co., Ltd. (SZSE:300888) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.
Winner Medical is a pretty big company. It has a market capitalization of CN¥31b. Normally institutions would own a significant portion of a company this size. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Winner Medical.
Check out our latest analysis for Winner MedicalSZSE:300888 Ownership Breakdown August 11th 2022
What Does The Institutional Ownership Tell Us About Winner Medical?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Winner Medical. 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. 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 Winner Medical's historic earnings and revenue below, but keep in mind there's always more to the story.SZSE:300888 Earnings and Revenue Growth August 11th 2022
We note that hedge funds don't have a meaningful investment in Winner Medical. Jian Li is currently the largest shareholder, with 69% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Sequoia Capital Equity Investment Management (Tianjin) Co., Ltd. is the second largest shareholder owning 6.7% of common stock, and Xiamen Leyuan Investment Partnership Enterprise (Limited Partnership) holds about 4.0% of the company stock.
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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Winner Medical
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.
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.
It seems that insiders own more than half the Winner Medical Co., Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful CN¥21b stake in this CN¥31b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.
General Public Ownership
With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Winner Medical. 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 Equity Ownership
With an ownership of 6.7%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Private Company Ownership
We can see that Private Companies own 7.7%, of the shares on issue. 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 3 warning signs for Winner Medical (1 doesn't sit too well with us) that you should be aware of.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.