Following a 38% decline over last year, recent gains may please Pentamaster Corporation Berhad (KLSE:PENTA) institutional owners

Key Insights

• Significantly high institutional ownership implies Pentamaster Corporation Berhad's stock price is sensitive to their trading actions
• 50% of the business is held by the top 5 shareholders
• Insiders own 25% of Pentamaster Corporation Berhad

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If you want to know who really controls Pentamaster Corporation Berhad (KLSE:PENTA), 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 institutions with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week's RM235m market cap gain would probably be appreciated by institutional investors, especially after a year of 38% losses.

Let's delve deeper into each type of owner of Pentamaster Corporation Berhad, beginning with the chart below.

Check out our latest analysis for Pentamaster Corporation Berhad

What Does The Institutional Ownership Tell Us About Pentamaster Corporation 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.

Pentamaster Corporation 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. 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 Pentamaster Corporation Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Pentamaster Corporation Berhad. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Pentamaster Corporation Berhad's case, its Top Key Executive, Choon Chuah, is the largest shareholder, holding 20% of shares outstanding. With 10% and 9.7% of the shares outstanding respectively, Employees Provident Fund of Malaysia and Kumpulan Wang Persaraan are the second and third largest shareholders.

On looking further, we found that 50% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Pentamaster Corporation 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.

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 Pentamaster Corporation Berhad. It has a market capitalization of just RM2.2b, and insiders have RM548m 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

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Pentamaster Corporation 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.

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. Case in point: We've spotted 1 warning sign for Pentamaster Corporation Berhad you should be aware of.

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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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.