Zhejiang Starry Pharmaceutical Co.,Ltd.'s (SHSE:603520) Market Cap Dropped CN¥393m Last Week; Retail Investors Bore the Brunt

Simply Wall St · Oct 24, 2023 02:06

Key Insights

Zhejiang Starry PharmaceuticalLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 11 shareholders own 51% of the company
Insiders own 36% of Zhejiang Starry PharmaceuticalLtd

Every investor in Zhejiang Starry Pharmaceutical Co.,Ltd. (SHSE:603520) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 42% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 7.4% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 36% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Zhejiang Starry PharmaceuticalLtd.

See our latest analysis for Zhejiang Starry PharmaceuticalLtd

ownership-breakdown — SHSE:603520 Ownership Breakdown October 24th 2023

What Does The Institutional Ownership Tell Us About Zhejiang Starry PharmaceuticalLtd?

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.

Zhejiang Starry PharmaceuticalLtd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Zhejiang Starry PharmaceuticalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — SHSE:603520 Earnings and Revenue Growth October 24th 2023

We note that hedge funds don't have a meaningful investment in Zhejiang Starry PharmaceuticalLtd. With a 18% stake, CEO Jian Hu is the largest shareholder. Jin Sheng Hu is the second largest shareholder owning 18% of common stock, and Guotai Asset Management Company Limited holds about 3.4% of the company stock.

After doing some more digging, we found that the top 11 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Zhejiang Starry PharmaceuticalLtd

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders maintain a significant holding in Zhejiang Starry Pharmaceutical Co.,Ltd.. Insiders have a CN¥1.7b stake in this CN¥4.9b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zhejiang Starry PharmaceuticalLtd. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Zhejiang Starry PharmaceuticalLtd you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.