Private equity firms invested in Uxin Limited (NASDAQ:UXIN) up 11% last week, insiders too were rewarded

Key Insights

• The considerable ownership by private equity firms in Uxin indicates that they collectively have a greater say in management and business strategy
• 68% of the business is held by the top 2 shareholders
• 37% of Uxin is held by insiders

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If you want to know who really controls Uxin Limited (NASDAQ:UXIN), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private equity firms were the group that reaped the most benefits after last week’s 11% price gain, insiders also received a 37% cut.

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

See our latest analysis for Uxin

What Does The Institutional Ownership Tell Us About Uxin?

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.

Institutions have a very small stake in Uxin. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Uxin is not owned by hedge funds. The company's largest shareholder is Nio Capital, with ownership of 40%. For context, the second largest shareholder holds about 28% of the shares outstanding, followed by an ownership of 5.2% by the third-largest shareholder. Furthermore, CEO Kun Dai is the owner of 2.4% of the company's shares.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Uxin

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 a reasonable proportion of Uxin Limited. It has a market capitalization of just US$732m, and insiders have US$273m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 40% stake in Uxin. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Uxin better, we need to consider many other factors. Be aware that Uxin is showing 4 warning signs in our investment analysis , and 2 of those are concerning...

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.