Key Insights

• Insiders appear to have a vested interest in China MeiDong Auto Holdings' growth, as seen by their sizeable ownership
• 52% of the company is held by a single shareholder (Fan Ye)
• 29% of China MeiDong Auto Holdings is held by Institutions

A look at the shareholders of China MeiDong Auto Holdings Limited (HKG:1268) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by HK$444m last week.

In the chart below, we zoom in on the different ownership groups of China MeiDong Auto Holdings.

What Does The Institutional Ownership Tell Us About China MeiDong Auto Holdings?

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.

China MeiDong Auto Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of China MeiDong Auto Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

It would appear that 5.2% of China MeiDong Auto Holdings shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In China MeiDong Auto Holdings' case, its Top Key Executive, Fan Ye, is the largest shareholder, holding 52% of shares outstanding. Fidelity International Ltd is the second largest shareholder owning 16% of common stock, and Aikya Investment Management Limited holds about 5.2% of the company stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of China MeiDong Auto Holdings

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems that insiders own more than half the China MeiDong Auto Holdings Limited stock. This gives them a lot of power. So they have a HK$1.7b stake in this HK$3.3b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand China MeiDong Auto Holdings better, we need to consider many other factors. Be aware that China MeiDong Auto Holdings is showing 3 warning signs in our investment analysis , you should know about...

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.