Both private companies who control a good portion of EG Industries Berhad (KLSE:EG) along with institutions must be dismayed after last week's 11% decrease

Key Insights

• EG Industries Berhad's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 12 investors have a majority stake in the company with 52% ownership
• Insider ownership in EG Industries Berhad is 20%

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If you want to know who really controls EG Industries Berhad (KLSE:EG), then you'll have to look at the makeup of its share registry. With 25% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 25% came under pressure after market cap dropped to RM1.0b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of EG Industries Berhad.

Check out our latest analysis for EG Industries Berhad

What Does The Institutional Ownership Tell Us About EG Industries 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.

We can see that EG Industries Berhad does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of EG Industries Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in EG Industries Berhad. With a 11% stake, CEO Pang Kang is the largest shareholder. For context, the second largest shareholder holds about 6.8% of the shares outstanding, followed by an ownership of 5.3% by the third-largest shareholder.

After doing some more digging, we found that the top 12 have the combined ownership of 52% in the company, suggesting that no single shareholder has significant control over the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of EG Industries Berhad

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 EG Industries Berhad. It has a market capitalization of just RM1.0b, and insiders have RM204m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in EG Industries Berhad. 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.

Private Company Ownership

Our data indicates that Private Companies hold 25%, of the company's shares. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand EG Industries Berhad better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with EG Industries Berhad .

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.