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Do Insiders Own Lots Of Shares In Dawnrays Pharmaceutical (Holdings) Limited (HKG:2348)?

Simply Wall St

A look at the shareholders of Dawnrays Pharmaceutical (Holdings) Limited (HKG:2348) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Dawnrays Pharmaceutical (Holdings) is a smaller company with a market capitalization of HK$2.2b, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about 2348.

Check out our latest analysis for Dawnrays Pharmaceutical (Holdings)

SEHK:2348 Ownership Summary, October 9th 2019

What Does The Institutional Ownership Tell Us About Dawnrays Pharmaceutical (Holdings)?

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.

We can see that Dawnrays Pharmaceutical (Holdings) does have institutional investors; and they hold 17% of the 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Dawnrays Pharmaceutical (Holdings), (below). Of course, keep in mind that there are other factors to consider, too.

SEHK:2348 Income Statement, October 9th 2019

We note that hedge funds don't have a meaningful investment in Dawnrays Pharmaceutical (Holdings). As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Dawnrays Pharmaceutical (Holdings)

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.

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 a reasonable proportion of Dawnrays Pharmaceutical (Holdings) Limited. Insiders own HK$283m worth of shares in the HK$2.2b company. 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

With a 26% ownership, the general public have some degree of sway over 2348. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 44%, of the company's shares. 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 Dawnrays Pharmaceutical (Holdings) better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.