Private companies are Brilliance China Automotive Holdings Limited's (HKG:1114) biggest owners and were rewarded after market cap rose by HK$858m last week
- Significant control over Brilliance China Automotive Holdings by private companies implies that this group likely has considerable sway over management and governance-related decisions
- The top 3 shareholders own 50% of the company
- own 22% of Brilliance China Automotive Holdings
To get a sense of who is truly in control of Brilliance China Automotive Holdings Limited (HKG:1114), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 42% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Clearly, private companies benefitted the most after the company's market cap rose by HK$858m last week.
Let's delve deeper into each type of owner of Brilliance China Automotive Holdings, beginning with the chart below.
See our latest analysis for Brilliance China Automotive Holdings
What Does The Institutional Ownership Tell Us About Brilliance China Automotive Holdings?
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.
Brilliance China Automotive Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Brilliance China Automotive Holdings' 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 Brilliance China Automotive Holdings. Our data shows that Huachen Automotive Group Holding Co.,Ltd. is the largest shareholder with 30% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 7.9% of the stock.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Brilliance China Automotive Holdings
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.
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 information suggests that Brilliance China Automotive Holdings Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. 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 HK$29m 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
With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Brilliance China Automotive Holdings. 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
We can see that Private Companies own 42%, 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Brilliance China Automotive Holdings , and understanding them should be part of your investment process.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
Brilliance China Automotive Holdings
Brilliance China Automotive Holdings Limited, an investment holding company, manufactures and sells BMW vehicles and automotive components in the People’s Republic of China and internationally.
Excellent balance sheet and good value.