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Private equity firms among CStone Pharmaceuticals’ (HKG:2616) largest stockholders and were hit after last week’s 14% price drop

Simply Wall St

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. The group holding the most number of shares in the company, around 45% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week’s 14% decline in share price, private equity firms suffered the most losses.

Let’s take a closer look to see what the different types of shareholders can tell us about CStone Pharmaceuticals.

Check out the opportunities and risks within the HK Biotechs industry.

SEHK:2616 Ownership Breakdown November 24th 2022

What Does The Institutional Ownership Tell Us About CStone Pharmaceuticals?

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.

We can see that CStone Pharmaceuticals does have institutional investors; and they hold a good portion of the company’s stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at CStone Pharmaceuticals’ earnings history below. Of course, the future is what really matters.

SEHK:2616 Earnings and Revenue Growth November 24th 2022

CStone Pharmaceuticals is not owned by hedge funds. Our data shows that 6 Dimensions Capital, L.P. is the largest shareholder with 25% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 9.8%, of the shares outstanding, respectively. Furthermore, CEO Jianxin Yang is the owner of 0.7% of the company’s shares.

On looking further, we found that 55% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of CStone Pharmaceuticals

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. 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 most recent data indicates that insiders own some shares in CStone Pharmaceuticals. In their own names, insiders own HK$152m worth of stock in the HK$4.0b 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– including retail investors — own 31% stake in the company, and hence can’t easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 45% stake in CStone Pharmaceuticals. This suggests they can be influential in key policy decisions. 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 9.8% 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:

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. For example, we’ve discovered 2 warning signs for CStone Pharmaceuticals that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether CStone Pharmaceuticals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

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