Wasco Berhad (KLSE:WASCO) surges 11%; private companies who own 44% shares profited along with institutions

Key Insights

• Significant control over Wasco Berhad by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 4 investors have a majority stake in the company with 52% ownership
• Institutional ownership in Wasco Berhad is 32%

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To get a sense of who is truly in control of Wasco Berhad (KLSE:WASCO), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While private companies were the group that benefitted the most from last week’s RM77m market cap gain, institutions too had a 32% share in those profits.

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

Check out our latest analysis for Wasco Berhad

What Does The Institutional Ownership Tell Us About Wasco Berhad?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Wasco Berhad does have institutional investors; and they hold a good portion of the company's stock. 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 Wasco Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Wasco Berhad. Looking at our data, we can see that the largest shareholder is Wah Seong (Malaya) Trading Co Sdn Bhd with 31% of shares outstanding. Tan Kim Yeow Sendirian Berhad is the second largest shareholder owning 8.6% of common stock, and Employees Provident Fund of Malaysia holds about 6.4% of the company stock. Additionally, the company's CEO Gian Maccagno directly holds 0.7% of the total shares outstanding.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Wasco Berhad

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.

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.

We can report that insiders do own shares in Wasco Berhad. It has a market capitalization of just RM759m, and insiders have RM36m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we 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-- including retail investors -- own 20% stake in the company, and hence can't 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

Our data indicates that Private Companies hold 44%, 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:

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 2 warning signs for Wasco Berhad you should be aware of, and 1 of them shouldn't be ignored.

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.