Key Insights
- Significant control over CStone Pharmaceuticals by retail investors implies that the general public has more power to influence management and governance-related decisions
- 48% of the business is held by the top 10 shareholders
- Insiders have been buying lately
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If you want to know who really controls CStone Pharmaceuticals (HKG:2616), then you'll have to look at the makeup of its share registry. With 52% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As market cap fell to HK$3.4b last week, retail investors would have faced the highest losses than any other shareholder groups of the company.
Let's take a closer look to see what the different types of shareholders can tell us about CStone Pharmaceuticals.
What Does The Institutional Ownership Tell Us About CStone Pharmaceuticals?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that CStone Pharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. 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. 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 CStone Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.
CStone Pharmaceuticals is not owned by hedge funds. 6 Dimensions Capital Limited is currently the company's largest shareholder with 22% of shares outstanding. Boyu Capital Group Management Ltd. is the second largest shareholder owning 10% of common stock, and Pfizer Inc. holds about 8.5% of the company stock. Furthermore, CEO Jianxin Yang is the owner of 1.3% of the company's shares.
A deeper look at our ownership data shows that the top 10 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. 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 CStone Pharmaceuticals
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.
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.
We can report that insiders do own shares in CStone Pharmaceuticals. As individuals, the insiders collectively own HK$52m worth of the HK$3.4b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 52% of CStone Pharmaceuticals shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Private Equity Ownership
With a stake of 32%, private equity firms could influence the CStone Pharmaceuticals board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Public Company Ownership
It appears to us that public companies own 8.5% of CStone Pharmaceuticals. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand CStone Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 1 warning sign for CStone Pharmaceuticals that 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.
