Key Insights

• Hefei Lifeon Pharmaceutical's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 54% of the company
• Institutions own 15% of Hefei Lifeon Pharmaceutical

If you want to know who really controls Hefei Lifeon Pharmaceutical Co., Ltd. (SZSE:003020), then you'll have to look at the makeup of its share registry. With 60% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥496m last week.

In the chart below, we zoom in on the different ownership groups of Hefei Lifeon Pharmaceutical.

What Does The Institutional Ownership Tell Us About Hefei Lifeon 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.

As you can see, institutional investors have a fair amount of stake in Hefei Lifeon Pharmaceutical. 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 Hefei Lifeon Pharmaceutical, (below). Of course, keep in mind that there are other factors to consider, too.

Hefei Lifeon Pharmaceutical is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Junqiu Ji with 47% of shares outstanding. Xiaojuan Deng is the second largest shareholder owning 7.0% of common stock, and Huashang Fund Management Company Ltd. holds about 4.8% of the company stock. Xiaojuan Deng, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Hefei Lifeon Pharmaceutical

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the Hefei Lifeon Pharmaceutical Co., Ltd. stock. This gives them a lot of power. That means they own CN¥2.1b worth of shares in the CN¥3.5b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in Hefei Lifeon Pharmaceutical. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Hefei Lifeon Pharmaceutical (of which 1 is a bit unpleasant!) you should know about.

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.