Insiders the biggest winners as GSP Automotive Group Wenzhou Co.,Ltd.'s (SHSE:605088) market cap rises to CN¥4.0b

Key Insights

• Insiders appear to have a vested interest in GSP Automotive Group WenzhouLtd's growth, as seen by their sizeable ownership
• The top 4 shareholders own 52% of the company
• Institutional ownership in GSP Automotive Group WenzhouLtd is 13%

To get a sense of who is truly in control of GSP Automotive Group Wenzhou Co.,Ltd. (SHSE:605088), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit CN¥4.0b market cap following a 12% gain in the stock.

In the chart below, we zoom in on the different ownership groups of GSP Automotive Group WenzhouLtd.

View our latest analysis for GSP Automotive Group WenzhouLtd

What Does The Institutional Ownership Tell Us About GSP Automotive Group WenzhouLtd?

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.

We can see that GSP Automotive Group WenzhouLtd does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see GSP Automotive Group WenzhouLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in GSP Automotive Group WenzhouLtd. Jiaru Zhou is currently the company's largest shareholder with 30% of shares outstanding. With 11% and 7.0% of the shares outstanding respectively, Richard Zhou and New Fortune International Group Ltd. are the second and third largest shareholders. Richard Zhou, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of GSP Automotive Group WenzhouLtd

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.

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 information suggests that insiders maintain a significant holding in GSP Automotive Group Wenzhou Co.,Ltd.. Insiders have a CN¥1.8b stake in this CN¥4.0b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in GSP Automotive Group WenzhouLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 8.0%, of the GSP Automotive Group WenzhouLtd 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for GSP Automotive Group WenzhouLtd you should be aware of, and 1 of them is potentially serious.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.