Significant insider control over China Automotive Systems implies vested interests in company growth
The top 2 shareholders own 54% of the company
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
If you want to know who really controls China Automotive Systems, Inc. (NASDAQ:CAAS), then you'll have to look at the makeup of its share registry. With 55% 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 a result, insiders as a group endured the highest losses after market cap fell by US$14m.
In the chart below, we zoom in on the different ownership groups of China Automotive Systems.
What Does The Institutional Ownership Tell Us About China Automotive Systems?
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 China Automotive Systems 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 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. 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.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.
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
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. 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.
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 most recent data indicates that insiders own the majority of China Automotive Systems, Inc.. This means they can collectively make decisions for the company. So they have a US$65m stake in this US$118m business. 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. 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 Company Ownership
It seems that Private Companies own 10%, of the China Automotive Systems stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
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 always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.