Key Insights

• Significant control over Sichuan Kelun Pharmaceutical by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 23 investors have a majority stake in the company with 50% ownership
• 31% of Sichuan Kelun Pharmaceutical is held by insiders

Every investor in Sichuan Kelun Pharmaceutical Co., Ltd. (SZSE:002422) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 41% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 31% shares weren't spared from last week's CN¥2.2b market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Sichuan Kelun Pharmaceutical, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Sichuan Kelun Pharmaceutical?

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.

Sichuan Kelun Pharmaceutical already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sichuan Kelun Pharmaceutical, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Sichuan Kelun Pharmaceutical. Looking at our data, we can see that the largest shareholder is Genxin Liu with 25% of shares outstanding. Ya'an Development Investment Company Limited is the second largest shareholder owning 6.3% of common stock, and Bosera Asset Management Co., Ltd. holds about 1.6% of the company stock. Furthermore, CEO Sichuan Liu is the owner of 0.6% of the company's shares.

A closer look at our ownership figures suggests that the top 23 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 Sichuan Kelun Pharmaceutical

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Sichuan Kelun Pharmaceutical Co., Ltd.. Insiders own CN¥10b worth of shares in the CN¥34b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 41% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sichuan Kelun Pharmaceutical. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 6.3%, 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.

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. Take risks for example - Sichuan Kelun Pharmaceutical has 2 warning signs we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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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.