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A look at the shareholders of Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.
Beijing Tong Ren Tang Chinese Medicine has a market capitalization of HK$13.21b, so we would expect some institutional investors to have noticed the stock. 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 3613.
Check out our latest analysis for Beijing Tong Ren Tang Chinese Medicine
What Does The Institutional Ownership Tell Us About Beijing Tong Ren Tang Chinese Medicine?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Beijing Tong Ren Tang Chinese Medicine already has institutions on the share registry. Indeed, they own 12.0% of 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 Beijing Tong Ren Tang Chinese Medicine’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
We note that hedge funds don’t have a meaningful investment in Beijing Tong Ren Tang Chinese Medicine. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Beijing Tong Ren Tang Chinese Medicine
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own less than 1% of Beijing Tong Ren Tang Chinese Medicine Company Limited. But they may have an indirect interest through a corporate structure that we haven’t picked up on. Keep in mind that it’s a big company, and the insiders own HK$8.7m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.