Owning 55% in China Automotive Systems, Inc. (NASDAQ:CAAS) means that insiders are heavily invested in the company's future
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
Every investor in China Automotive Systems, Inc. (NASDAQ:CAAS) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
So it follows, every decision made by insiders of China Automotive Systems regarding the company's future would be crucial to them.
Let's delve deeper into each type of owner of China Automotive Systems, beginning with the chart below.
Check out 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.
Since institutions own only a small portion of China Automotive Systems, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.
We note that hedge funds don't have a meaningful investment in China Automotive Systems. From our data, we infer that the largest shareholder is Hanlin Chen (who also holds the title of Top Key Executive) with 44% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder. Furthermore, CEO Qizhou Wu is the owner of 4.4% of the company's shares.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of China Automotive Systems
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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders own more than half of China Automotive Systems, Inc.. This gives them effective control of the company. Given it has a market cap of US$159m, that means they have US$88m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China Automotive Systems. 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 10%, 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for China Automotive Systems you should be aware of, and 1 of them doesn't sit too well with us.
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.
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