With 65% ownership, China Automotive Systems, Inc. (NASDAQ:CAAS) insiders have a lot riding on the company's future

editorial-team@simplywallst.com (Simply Wall St)

Thu, Jan 23, 2025, 3:45 AM 4 min read

Insiders appear to have a vested interest in China Automotive Systems' growth, as seen by their sizeable ownership
52% of the company is held by a single shareholder (Hanlin Chen)
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in China Automotive Systems, Inc. (NASDAQ:CAAS) should be aware of the most powerful shareholder groups. With 65% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

So, insiders of China Automotive Systems have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.

Let's delve deeper into each type of owner of China Automotive Systems, beginning with the chart below.

See our latest analysis for China Automotive Systems

ownership-breakdown — NasdaqCM:CAAS Ownership Breakdown January 23rd 2025

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.

Less than 5% of China Automotive Systems is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

earnings-and-revenue-growth — NasdaqCM:CAAS Earnings and Revenue Growth January 23rd 2025

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 52% 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. With 5.1% and 5.0% of the shares outstanding respectively, Qizhou Wu and Liping Xie are the second and third largest shareholders. Interestingly, the second-largest shareholder, Qizhou Wu is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of China Automotive Systems

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.

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$78m stake in this US$120m business. 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

The general public-- including retail investors -- own 31% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China Automotive Systems 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.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.