Do Insiders Own Lots Of Shares In Grand Central Enterprises Bhd. (KLSE:GCE)?

A look at the shareholders of Grand Central Enterprises Bhd. (KLSE:GCE) 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 RM84m, Grand Central Enterprises Bhd 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. Let’s take a closer look to see what the different types of shareholder can tell us about Grand Central Enterprises Bhd.

Check out our latest analysis for Grand Central Enterprises Bhd

KLSE:GCE Ownership Summary, March 3rd 2020
KLSE:GCE Ownership Summary, March 3rd 2020

What Does The Lack Of Institutional Ownership Tell Us About Grand Central Enterprises Bhd?

Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it’s always possible that professional investors are avoiding a company because they don’t think it’s the best place for their money. Grand Central Enterprises Bhd’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.

KLSE:GCE Income Statement, March 3rd 2020
KLSE:GCE Income Statement, March 3rd 2020

Grand Central Enterprises Bhd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Tan Chee Hoe & Sons Sdn Bhd with 49% of shares outstanding. The second and third largest shareholders are Hotel Grand Central Limited and Chelliah Holdings Sdn Bhd, holding 24% and 1.8%, respectively.

Additionally, we found that 2 of the top shareholders have a considerable amount of ownership in the company, via their 73% stake.

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. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Grand Central Enterprises Bhd

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Grand Central Enterprises Bhd.. As individuals, the insiders collectively own RM5.7m worth of the RM84m company. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, with a 15% stake in the company, will not easily be ignored. 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

It seems that Private Companies own 54%, of the GCE stock. 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.

Public Company Ownership

We can see that public companies hold 24%, of the GCE shares on issue. It’s hard to say for sure, but this suggests they have entwined business interests. This might be a strategic stake, so it’s worth watching this space for changes in ownership.

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 example, we’ve discovered 3 warning signs for Grand Central Enterprises Bhd (1 is a bit unpleasant!) that you should be aware of before investing here.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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