Beauty Farm Medical and Health Industry Inc. (HKG:2373) insiders, who hold 34% of the firm would be disappointed by the recent pullback

Key Insights

• Beauty Farm Medical and Health Industry's significant insider ownership suggests inherent interests in company's expansion
• The top 4 shareholders own 56% of the company
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

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Every investor in Beauty Farm Medical and Health Industry Inc. (HKG:2373) should be aware of the most powerful shareholder groups. With 34% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to HK$6.5b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Beauty Farm Medical and Health Industry, beginning with the chart below.

Check out our latest analysis for Beauty Farm Medical and Health Industry

What Does The Institutional Ownership Tell Us About Beauty Farm Medical and Health Industry?

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 Beauty Farm Medical and Health Industry 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. 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 Beauty Farm Medical and Health Industry's historic earnings and revenue below, but keep in mind there's always more to the story.

Beauty Farm Medical and Health Industry is not owned by hedge funds. The company's largest shareholder is Fangyu Li, with ownership of 18%. In comparison, the second and third largest shareholders hold about 16% and 15% of the stock. Yang Li, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

On looking further, we found that 56% 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.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Beauty Farm Medical and Health Industry

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.

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 information suggests that insiders maintain a significant holding in Beauty Farm Medical and Health Industry Inc.. It has a market capitalization of just HK$6.5b, and insiders have HK$2.2b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Beauty Farm Medical and Health Industry. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 14%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 28%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Beauty Farm Medical and Health Industry better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Beauty Farm Medical and Health Industry .

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.