Private equity firms in FAWER Automotive Parts Limited Company (SZSE:000030) are its biggest bettors, and their bets paid off as stock gained 6.0% last week

Key Insights

• FAWER Automotive Parts Limited's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 60% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of FAWER Automotive Parts Limited Company (SZSE:000030), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, private equity firms benefitted the most after the company's market cap rose by CN¥447m last week.

Let's take a closer look to see what the different types of shareholders can tell us about FAWER Automotive Parts Limited.

View our latest analysis for FAWER Automotive Parts Limited

What Does The Institutional Ownership Tell Us About FAWER Automotive Parts Limited?

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.

We can see that FAWER Automotive Parts Limited does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 FAWER Automotive Parts Limited's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in FAWER Automotive Parts Limited. Faw Equity Investment (Tianjin) Co., Ltd. is currently the largest shareholder, with 26% of shares outstanding. TTGG Venture Capital Group Co., Ltd. is the second largest shareholder owning 19% of common stock, and Ningbo Huaxiang Electronic Co., Ltd. holds about 15% of the company stock.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 60% stake.

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 FAWER Automotive Parts Limited

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of FAWER Automotive Parts Limited Company. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥44m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in FAWER Automotive Parts Limited. 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.

Private Equity Ownership

With an ownership of 56%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Public Company Ownership

It appears to us that public companies own 15% of FAWER Automotive Parts Limited. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Case in point: We've spotted 3 warning signs for FAWER Automotive Parts Limited you should be aware of, and 1 of them is concerning.

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.