LI Auto
With a 31% stake, Li Auto Inc. (NASDAQ:LI) insiders have a lot riding on the company
editorial-team@simplywallst.com (Simply Wall St)
Thu, January 4, 2024 at 4:00 AM PST
In this article:
Key Insights- Insiders appear to have a vested interest in Li Auto's growth, as seen by their sizeable ownership
- A total of 6 investors have a majority stake in the company with 51% ownership
- 24% of Li Auto is held by Institutions
A look at the shareholders of Li Auto Inc. ( NASDAQ:LI) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 31% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
So it follows, every decision made by insiders of Li Auto regarding the company's future would be crucial to them.
Let's delve deeper into each type of owner of Li Auto, beginning with the chart below.
View our latest analysis for Li Auto
ownership-breakdown
What Does The Institutional Ownership Tell Us About Li Auto?
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.
As you can see, institutional investors have a fair amount of stake in Li Auto. 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 Li Auto's historic earnings and revenue below, but keep in mind there's always more to the story.
earnings-and-revenue-growth
Li Auto is not owned by hedge funds. With a 23% stake, CEO Xiang Li is the largest shareholder. Meituan is the second largest shareholder owning 13% of common stock, and Xing Wang holds about 6.3% of the company stock. Interestingly, the third-largest shareholder, Xing Wang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Li Auto
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.
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.
Our most recent data indicates that insiders own a reasonable proportion of Li Auto Inc.. It has a market capitalization of just US$36b, and insiders have US$11b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 28% stake in Li Auto. 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.
Private Company Ownership
It seems that Private Companies own 3.9%, of the Li Auto stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Public Company Ownership
We can see that public companies hold 13% of the Li Auto 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Li Auto better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Li Auto , and understanding them should be part of your investment process.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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