Key Insights

To get a sense of who is truly in control of Shanghai Yongmaotai Automotive Technology Co., Ltd. (SHSE:605208), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 21% gain.

In the chart below, we zoom in on the different ownership groups of Shanghai Yongmaotai Automotive Technology.

Check out our latest analysis for Shanghai Yongmaotai Automotive Technology

What Does The Institutional Ownership Tell Us About Shanghai Yongmaotai Automotive Technology?

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 Shanghai Yongmaotai Automotive Technology 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 Shanghai Yongmaotai Automotive Technology’s historic earnings and revenue below, but keep in mind there’s always more to the story.

Hedge funds don’t have many shares in Shanghai Yongmaotai Automotive Technology. Looking at our data, we can see that the largest shareholder is the CEO Hong Xu with 33% of shares outstanding. With 6.6% and 5.4% of the shares outstanding respectively, Zhonggeng Fund Management Co., Ltd. and Yazhi Xu are the second and third largest shareholders. Interestingly, the third-largest shareholder, Yazhi Xu is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company’s top shareholders.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Shanghai Yongmaotai Automotive Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems insiders own a significant proportion of Shanghai Yongmaotai Automotive Technology Co., Ltd.. It has a market capitalization of just CN¥2.4b, and insiders have CN¥1.1b 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, who are usually individual investors, hold a 39% stake in Shanghai Yongmaotai Automotive Technology. 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 5.4%, of the shares on issue. 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:

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. Take risks for example – Shanghai Yongmaotai Automotive Technology has 3 warning signs (and 2 which don’t sit too well with us) we think you should know about.

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.