Key Insights

• Significant control over FAWER Automotive Parts Limited by private equity firms implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 60% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in FAWER Automotive Parts Limited Company (SZSE:000030) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 56% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private equity firms collectively scored the highest last week as the company hit CN¥8.7b market cap following a 6.0% gain in the stock.

Let's delve deeper into each type of owner of FAWER Automotive Parts Limited, beginning with the chart below.

What Does The Institutional Ownership Tell Us About FAWER Automotive Parts Limited?

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.

FAWER Automotive Parts Limited 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 FAWER Automotive Parts Limited's historic earnings and revenue below, but keep in mind there's always more to the story.

FAWER Automotive Parts Limited is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Faw Equity Investment (Tianjin) Co., Ltd. with 26% of shares outstanding. In comparison, the second and third largest shareholders hold about 19% and 15% of the stock.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of FAWER Automotive Parts Limited

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our data suggests that insiders own under 1% of FAWER Automotive Parts Limited Company in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CN¥49m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 23% 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

With a stake of 56%, private equity firms could influence the FAWER Automotive Parts Limited board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Public Company Ownership

We can see that public companies hold 15% of the FAWER Automotive Parts Limited shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for FAWER Automotive Parts Limited (of which 1 is concerning!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com