Private companies among Changzhou Xiangming Intelligent Drive System Corporation's (SZSE:301226) largest shareholders, saw gain in holdings value after stock jumped 10% last week

Key Insights

• The considerable ownership by private companies in Changzhou Xiangming Intelligent Drive System indicates that they collectively have a greater say in management and business strategy
• Changzhou Xiangxing Information Technology Co., Ltd. owns 51% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Changzhou Xiangming Intelligent Drive System Corporation (SZSE:301226) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 59% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies collectively scored the highest last week as the company hit CN¥2.9b market cap following a 10% gain in the stock.

Let's delve deeper into each type of owner of Changzhou Xiangming Intelligent Drive System, beginning with the chart below.

Check out our latest analysis for Changzhou Xiangming Intelligent Drive System

What Does The Institutional Ownership Tell Us About Changzhou Xiangming Intelligent Drive System?

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 Changzhou Xiangming Intelligent Drive System does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Changzhou Xiangming Intelligent Drive System's historic earnings and revenue below, but keep in mind there's always more to the story.

Changzhou Xiangming Intelligent Drive System is not owned by hedge funds. Changzhou Xiangxing Information Technology Co., Ltd. is currently the company's largest shareholder with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 3.6% and 3.5% of the stock.

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 Changzhou Xiangming Intelligent Drive System

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 some shares in Changzhou Xiangming Intelligent Drive System Corporation. It has a market capitalization of just CN¥2.9b, and insiders have CN¥124m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 31% stake in Changzhou Xiangming Intelligent Drive System. 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.

Private Company Ownership

We can see that Private Companies own 59%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Changzhou Xiangming Intelligent Drive System (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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.