China Automotive Systems, Inc. (NASDAQ:CAAS) insiders have significant skin in the game with 55% ownership
Key Insights
Insiders appear to have a vested interest in China Automotive Systems' growth, as seen by their sizeable ownership
A total of 2 investors have a majority stake in the company with 54% ownership
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
To get a sense of who is truly in control of China Automotive Systems, Inc. (NASDAQ:CAAS), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
So it follows, every decision made by insiders of China Automotive Systems regarding the company's future would be crucial to them.
Let's take a closer look to see what the different types of shareholders can tell us about China Automotive Systems.
See our latest analysis for China Automotive Systems
What Does The Institutional Ownership Tell Us About China Automotive Systems?
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 have a fair amount of stake in China Automotive Systems. 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. 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 China Automotive Systems' earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in China Automotive Systems. Our data suggests that Hanlin Chen, who is also the company's Top Key Executive, holds the most number of shares at 44%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 10% and 5.0% of the shares outstanding respectively, Wiselink Holdings Limited and Liping Xie are the second and third largest shareholders. Furthermore, CEO Qizhou Wu is the owner of 4.4% of the company's shares.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence 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. 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 China Automotive Systems
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.
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 the majority of China Automotive Systems, Inc.. This means they can collectively make decisions for the company. That means they own US$59m worth of shares in the US$107m company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Automotive Systems. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Company Ownership
It seems that Private Companies own 10%, of the China Automotive Systems stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
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.
I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.
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.
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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.
