Wuxi Smart Auto-Control Engineering Co., Ltd. (SZSE:002877) adds CN¥363m in market cap and insiders have a 59% stake in that gain

Key Insights

• Significant insider control over Wuxi Smart Auto-Control Engineering implies vested interests in company growth
• 50% of the business is held by the top 4 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Wuxi Smart Auto-Control Engineering Co., Ltd. (SZSE:002877), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥363m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Wuxi Smart Auto-Control Engineering.

See our latest analysis for Wuxi Smart Auto-Control Engineering

What Does The Institutional Ownership Tell Us About Wuxi Smart Auto-Control Engineering?

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 Wuxi Smart Auto-Control Engineering 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 Wuxi Smart Auto-Control Engineering's historic earnings and revenue below, but keep in mind there's always more to the story.

Wuxi Smart Auto-Control Engineering is not owned by hedge funds. The company's largest shareholder is Jian Biao Shen, with ownership of 35%. With 5.5% and 5.1% of the shares outstanding respectively, Yao Wu Li and Wei Wu are the second and third largest shareholders. Wei Wu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On looking further, we found that 50% 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.

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 Wuxi Smart Auto-Control Engineering

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.

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.

Our most recent data indicates that insiders own the majority of Wuxi Smart Auto-Control Engineering Co., Ltd.. This means they can collectively make decisions for the company. So they have a CN¥2.2b stake in this CN¥3.7b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Wuxi Smart Auto-Control Engineering. 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 Wuxi Smart Auto-Control Engineering better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Wuxi Smart Auto-Control Engineering (of which 1 is a bit concerning!) you should know about.

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.