Guangzhou Tongda Auto Electric Co., Ltd's (SHSE:603390) most bullish insider, CEO Yingbiao Xing must be pleased with the recent 10.0% gain

Key Insights

• Significant insider control over Guangzhou Tongda Auto Electric implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 63% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Guangzhou Tongda Auto Electric Co., Ltd (SHSE:603390) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 65% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 10.0% gain.

In the chart below, we zoom in on the different ownership groups of 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.

Since institutions own only a small portion of Guangzhou Tongda Auto Electric, 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. 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.

Hedge funds don't have many shares in Guangzhou Tongda Auto Electric. The company's CEO Yingbiao Xing is the largest shareholder with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 29% and 0.9%, of the shares outstanding, respectively.

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.

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 Guangzhou Tongda Auto Electric

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Guangzhou Tongda Auto Electric Co., Ltd. This means they can collectively make decisions for the company. Given it has a market cap of CN¥4.2b, that means they have CN¥2.7b 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 31% 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Guangzhou Tongda Auto Electric you should know about.

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.