Top Key Executive Hui-Ta Lee, Dufu Technology Corp. Berhad's (KLSE:DUFU) largest shareholder sees value of holdings go down 11% after recent drop

Key Insights

• Significant insider control over Dufu Technology Berhad implies vested interests in company growth
• 52% of the business is held by the top 7 shareholders
• Institutional ownership in Dufu Technology Berhad is 20%

If you want to know who really controls Dufu Technology Corp. Berhad (KLSE:DUFU), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 35% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to RM1.3b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Dufu Technology Berhad.

View our latest analysis for Dufu Technology Berhad

What Does The Institutional Ownership Tell Us About Dufu Technology Berhad?

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.

As you can see, institutional investors have a fair amount of stake in Dufu Technology Berhad. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Dufu Technology Berhad's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Dufu Technology Berhad. Our data suggests that Hui-Ta Lee, who is also the company's Top Key Executive, holds the most number of shares at 23%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 9.6% and 5.0% of the shares outstanding respectively, Perfect Commerce Sdn Bhd and Ser Wong are the second and third largest shareholders.

We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Dufu Technology Berhad

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 most recent data indicates that insiders own a reasonable proportion of Dufu Technology Corp. Berhad. Insiders have a RM446m stake in this RM1.3b business. 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 34% stake in Dufu Technology Berhad. 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

We can see that Private Companies own 10%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Dufu Technology Berhad better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Dufu Technology Berhad (including 1 which makes us a bit uncomfortable) .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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