Guangzhou Tongda Auto Electric Co., Ltd (SHSE:603390) CEO Yingbiao Xing, the company's largest shareholder sees 10% reduction in holdings value

Key Insights

• Insiders appear to have a vested interest in Guangzhou Tongda Auto Electric's growth, as seen by their sizeable ownership
• The top 2 shareholders own 63% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Guangzhou Tongda Auto Electric Co., Ltd (SHSE:603390) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 66% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 10%.

Let's take a closer look to see what the different types of shareholders can tell us about Guangzhou Tongda Auto Electric.

View our latest analysis for Guangzhou Tongda Auto Electric

What Does The Institutional Ownership Tell Us About Guangzhou Tongda Auto Electric?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Less than 5% of Guangzhou Tongda Auto Electric 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. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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 Guangzhou Tongda Auto Electric. The company's CEO Yingbiao Xing is the largest shareholder with 34% of shares outstanding. In comparison, the second and third largest shareholders hold about 30% and 0.9% of the stock.

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 63% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Guangzhou Tongda Auto Electric

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Guangzhou Tongda Auto Electric Co., Ltd stock. This gives them a lot of power. Given it has a market cap of CN¥3.2b, that means they have CN¥2.1b 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, who are usually individual investors, hold a 30% stake in Guangzhou Tongda Auto Electric. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Guangzhou Tongda Auto Electric better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Guangzhou Tongda Auto Electric (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

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.