Key Insights

• Institutions' substantial holdings in Shanghai Baolong Automotive implies that they have significant influence over the company's share price
• The top 10 shareholders own 50% of the company
• Insiders own 33% of Shanghai Baolong Automotive

A look at the shareholders of Shanghai Baolong Automotive Corporation (SHSE:603197) can tell us which group is most powerful. The group holding the most number of shares in the company, around 35% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And as as result, institutional investors reaped the most rewards after the company's stock price gained 14% last week. One-year return to shareholders is currently 6.3% and last week's gain was the icing on the cake.

Let's take a closer look to see what the different types of shareholders can tell us about Shanghai Baolong Automotive.

What Does The Institutional Ownership Tell Us About Shanghai Baolong Automotive?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Shanghai Baolong Automotive already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Baolong Automotive'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 Baolong Automotive. Hong Ling Chen is currently the company's largest shareholder with 18% of shares outstanding. Zu Qiu Zhang is the second largest shareholder owning 9.8% of common stock, and Invesco Great Wall Fund Management Co. Ltd holds about 4.5% of the company stock.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Shanghai Baolong Automotive

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.

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 Shanghai Baolong Automotive Corporation. Insiders own CN¥3.3b worth of shares in the CN¥10b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 32% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanghai Baolong Automotive better, we need to consider many other factors. For instance, we've identified 3 warning signs for Shanghai Baolong Automotive (2 are concerning) that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.