Stock Analysis

Is Gamuda Berhad's (KLSE:GAMUDA) Shareholder Ownership Skewed Towards Insiders?

KLSE:GAMUDA
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A look at the shareholders of Gamuda Berhad (KLSE:GAMUDA) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

With a market capitalization of RM9.6b, Gamuda Berhad is a decent size, so it is probably on the radar of institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Gamuda Berhad.

Check out our latest analysis for Gamuda Berhad

ownership-breakdown
KLSE:GAMUDA Ownership Breakdown December 11th 2020

What Does The Institutional Ownership Tell Us About Gamuda 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.

Gamuda Berhad 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. 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 Gamuda Berhad's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
KLSE:GAMUDA Earnings and Revenue Growth December 11th 2020

Gamuda Berhad is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Permodalan Nasional Berhad with 17% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 8.3% by the third-largest shareholder. In addition, we found that Yun Lin, the CEO has 3.0% of the shares allocated to his name

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Gamuda 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. 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.

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 information suggests that insiders maintain a significant holding in Gamuda Berhad. It is very interesting to see that insiders have a meaningful RM997m stake in this RM9.6b business. 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, with a 25% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. For instance, we've identified 3 warning signs for Gamuda Berhad (1 is significant) that you should be aware of.

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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