key insights
- Significant control over Guangzhou Automobile Group by private companies means the general public has more power to influence management and governance decisions.
- The company’s largest shareholder is Guangzhou Automobile Industry Group Co., Ltd., which holds 51% of the stock.
- Financial institutions hold 14% of Guangzhou Automobile Group shares
A look at the shareholders of Guangzhou Automobile Group Co., Ltd. (HKG:2238) can tell us which group is the most powerful. The group with the largest stake in the company (about 54% to be exact) is privately held. In other words, this group faces the greatest upside potential (or downside risk).
The private company would have faced the biggest losses than any other shareholder group in the company, as its market capitalization fell to HK$77 billion last week.
Let’s take a closer look to see what the different types of shareholders can tell us about Guangzhou Automobile Group.
Check out our latest analysis for Guangzhou Automobile Group.
What does institutional ownership tell us about Guangzhou Automobile Group?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often see increased enthusiasm for a stock once it’s included in a major index. We would expect most companies to have some institutions on their register, especially if they are growing.
We can see that Guangzhou Automobile Group has institutional investors. And they own a significant portion of the company’s stock. This suggests some credibility among professional investors. But we can’t rely on that fact alone because 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’. If such a trade goes wrong, multiple parties may compete to sell stock quickly. This risk is higher for companies without a history of growth. You can see Guangzhou Automobile Group’s historical 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. Guangzhou Automobile Industry Group Co., Ltd. is currently the company’s largest shareholder, holding 51% of the company’s outstanding shares. With such a huge ownership stake, we can assume that they have a lot of influence over the future of the company. Guangzhou Huiyin Tianyue Stock Investment Fund Management Co., Ltd. and BlackRock Corporation hold 3.8% and 1.8% of the outstanding shares, respectively, making them the second and third largest shareholders.
Researching institutional ownership is a good way to assess and filter a stock’s expected performance. The same can be done by studying analyst sentiment. Quite a few analysts cover this stock, so you can find out its expected growth quite easily.
Guangzhou Automobile Group Insider Ownership
The definition of an insider may vary slightly from country to country, but members of the board of directors are always considered. A company’s management runs the business, but the CEO answers to the board, even if he or she is a member of the board.
I generally consider insider ownership to be a good thing. However, in some cases, it may be more difficult for other shareholders to hold the board accountable for decisions.
Our latest data shows that insiders own less than 1% of Guangzhou Automobile Group Co., Ltd. However, insiders may have an indirect interest through the corporate structure that we are not aware of. It is a large company, so we expect insiders to own only a small percentage of its shares. But it’s worth noting that they own HK$181m worth of shares. Perhaps it’s important to consider recent buys and sells as well. You can click here to see if insiders have been buying or selling.
Public ownership
The general public, usually individual investors, owns 32% of Guangzhou Automobile Group’s shares. Although this size of ownership is significant, it may not be enough to change company policy if the decision is not aligned with other large shareholders.
Private company ownership
It appears that private companies own 54% of Guangzhou Automobile Group’s shares. Private companies may qualify as related parties. Insiders may have an interest in a public company through ownership in a private company rather than in their individual capacity. Although it is difficult to draw broad conclusions, it is worth noting as an area with room for further research.
Next steps:
I think it would be very interesting to see who exactly owns the company. But to really gain insight, you need to consider other information as well. To do so, you need to know the following: 3 warning signs We discovered this jointly with Guangzhou Automobile Group.
If you’re like me, you might want to consider whether this company will grow or shrink. Luckily you can check this free report showing analyst forecasts for its future.
Note: The numbers in this article are calculated using data from the previous 12 months and refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the full year annual report figures.
Valuation is complex, but we help make it simple.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.