Owning 65% in China Automotive Systems, Inc. (NASDAQ:CAAS) means that insiders are heavily invested in the company's future

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

Fri, Aug 16, 2024, 4:44 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

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 65% 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.

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.

Check out our latest analysis for China Automotive Systems

ownership-breakdown — NasdaqCM:CAAS Ownership Breakdown August 16th 2024

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.

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.

earnings-and-revenue-growth — NasdaqCM:CAAS Earnings and Revenue Growth August 16th 2024

Hedge funds don't have many shares 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 52%. 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. In comparison, the second and third largest shareholders hold about 5.1% and 5.0% of the stock. 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 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. 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

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the China Automotive Systems, Inc. stock. This gives them a lot of power. Given it has a market cap of US$111m, that means they have US$72m worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they 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 group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 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, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.