Recent 7.4% decline may not have gone down well with China MeiDong Auto Holdings Limited (HKG:1268) insiders who've been purchasing recently

Key Insights

• China MeiDong Auto Holdings' significant insider ownership suggests inherent interests in company's expansion
• Fan Ye owns 52% of the company
• Insiders have been buying lately

To get a sense of who is truly in control of China MeiDong Auto Holdings Limited (HKG:1268), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 53% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And looking at our data, we can see that insiders have bought shares recently. However, with shares price down 7.4% last week, they must be disappointed.

Let's take a closer look to see what the different types of shareholders can tell us about China MeiDong Auto Holdings.

See our latest analysis for China MeiDong Auto Holdings

What Does The Institutional Ownership Tell Us About China MeiDong Auto Holdings?

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.

As you can see, institutional investors have a fair amount of stake in China MeiDong Auto Holdings. 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 China MeiDong Auto Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

China MeiDong Auto Holdings is not owned by hedge funds. Our data suggests that Fan Ye, who is also the company's Top Key Executive, holds the most number of shares at 52%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Cederberg Capital Limited is the second largest shareholder owning 4.9% of common stock, and Zhong Ou Fund Management Co., Ltd holds about 2.8% of the company stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of China MeiDong Auto 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the China MeiDong Auto Holdings Limited stock. This gives them a lot of power. So they have a HK$3.3b stake in this HK$6.2b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over China MeiDong Auto Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that China MeiDong Auto Holdings is showing 4 warning signs in our investment analysis , you should know about...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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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.