Is Ajman Bank PJSC's (DFM:AJMANBANK) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
November 21, 2021
DFM:AJMANBANK
Source: Shutterstock

If you want to know who really controls Ajman Bank PJSC (DFM:AJMANBANK), then you'll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

With a market capitalization of د.إ1.8b, Ajman Bank PJSC is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about Ajman Bank PJSC.

View our latest analysis for Ajman Bank PJSC

ownership-breakdown
DFM:AJMANBANK Ownership Breakdown November 22nd 2021

What Does The Lack Of Institutional Ownership Tell Us About Ajman Bank PJSC?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Ajman Bank PJSC might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

earnings-and-revenue-growth
DFM:AJMANBANK Earnings and Revenue Growth November 22nd 2021

Hedge funds don't have many shares in Ajman Bank PJSC. Looking at our data, we can see that the largest shareholder is Government of Ajman with 26% of shares outstanding. With 10% and 5.0% of the shares outstanding respectively, Sheikh Bin Humaid Bin Rashid Al Noaimi and Al Salem Company Ltd. are the second and third largest shareholders.

On studying our ownership data, we found that 6 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Ajman Bank PJSC

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.

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.

It seems insiders own a significant proportion of Ajman Bank PJSC. It has a market capitalization of just د.إ1.8b, and insiders have د.إ278m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 53% stake in Ajman Bank PJSC, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 5.0%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Ajman Bank PJSC has 2 warning signs (and 1 which can't be ignored) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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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