Painful week for retail investors invested in Hibiscus Petroleum Berhad (KLSE:HIBISCS) after 14% drop, institutions also suffered losses

Key Insights

• The considerable ownership by retail investors in Hibiscus Petroleum Berhad indicates that they collectively have a greater say in management and business strategy
• 47% of the business is held by the top 25 shareholders
• 12% of Hibiscus Petroleum Berhad is held by insiders

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

A look at the shareholders of Hibiscus Petroleum Berhad (KLSE:HIBISCS) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of retail investors took a hit after last week’s 14% price drop, institutions with their 30% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Hibiscus Petroleum Berhad.

View our latest analysis for Hibiscus Petroleum Berhad

What Does The Institutional Ownership Tell Us About Hibiscus Petroleum 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.

Hibiscus Petroleum Berhad already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Hibiscus Petroleum Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

Hibiscus Petroleum Berhad is not owned by hedge funds. Hibiscus Upstream Sdn Bhd is currently the company's largest shareholder with 5.9% of shares outstanding. For context, the second largest shareholder holds about 5.2% of the shares outstanding, followed by an ownership of 5.1% by the third-largest shareholder. Additionally, the company's CEO Kenneth Pereira directly holds 4.0% of the total shares outstanding.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Hibiscus Petroleum 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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Hibiscus Petroleum Berhad. Insiders have a RM139m stake in this RM1.2b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of Hibiscus Petroleum Berhad shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 7.9%, of the shares on issue. 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 Hibiscus Petroleum Berhad better, we need to consider many other factors. For instance, we've identified 2 warning signs for Hibiscus Petroleum Berhad that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.