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A look at the shareholders of Zhongzhi Pharmaceutical Holdings Limited (HKG:3737) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
Zhongzhi Pharmaceutical Holdings is not a large company by global standards. It has a market capitalization of HK$1.2b, which means it wouldn't have the attention of many institutional investors. In the chart below below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholder can tell us about 3737.
Check out our latest analysis for Zhongzhi Pharmaceutical Holdings
What Does The Institutional Ownership Tell Us About Zhongzhi Pharmaceutical Holdings?
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 own 13% of Zhongzhi Pharmaceutical Holdings. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Zhongzhi Pharmaceutical Holdings's historic earnings and revenue, below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Zhongzhi Pharmaceutical Holdings. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Zhongzhi Pharmaceutical Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.