Guangzhou Automobile Group Co., Ltd.'s (HKG:2238) last week's 5.3% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Guangzhou Automobile Group indicates that they collectively have a greater say in management and business strategy
• 53% of the company is held by a single shareholder (Guangzhou Automobile Industry Group Co. Ltd.)
• Insiders have been buying lately

Every investor in Guangzhou Automobile Group Co., Ltd. (HKG:2238) should be aware of the most powerful shareholder groups. With 55% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, private companies endured the biggest losses as the stock fell by 5.3%.

Let's delve deeper into each type of owner of Guangzhou Automobile Group, beginning with the chart below.

View our latest analysis for Guangzhou Automobile Group

What Does The Institutional Ownership Tell Us About Guangzhou Automobile Group?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Guangzhou Automobile Group 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 Guangzhou Automobile Group'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 Guangzhou Automobile Group. The company's largest shareholder is Guangzhou Automobile Industry Group Co. Ltd., with ownership of 53%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.8% and 1.8% of the shares outstanding respectively, Guangzhou Huiyin Tianyue Equity Investment Fund Management Co., Ltd. and Zejun Hong are the second and third largest shareholders.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Guangzhou Automobile Group

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.

We can report that insiders do own shares in Guangzhou Automobile Group Co., Ltd.. It is a very large company, and board members collectively own HK$1.1b worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Guangzhou Automobile Group. 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 55%, of the Guangzhou Automobile Group 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. For example, we've discovered 2 warning signs for Guangzhou Automobile Group that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.