Private companies who hold 53% of Guan Chong Berhad (KLSE:GCB) gained 7.7%, insiders profited as well

Key Insights

• Significant control over Guan Chong Berhad by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 56% of the company
• Insider ownership in Guan Chong Berhad is 20%

Every investor in Guan Chong Berhad (KLSE:GCB) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 53% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Private companies gained the most after market cap touched RM5.1b last week, while insiders who own 20% also benefitted.

Let's take a closer look to see what the different types of shareholders can tell us about Guan Chong Berhad.

View our latest analysis for Guan Chong Berhad

What Does The Institutional Ownership Tell Us About Guan Chong Berhad?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Guan Chong 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 Guan Chong 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 Guan Chong Berhad. The company's largest shareholder is Guan Chong Resources Sdn. Bhd, with ownership of 50%. With 6.5% and 4.9% of the shares outstanding respectively, Cheng Hia and Hoe Tay are the second and third largest shareholders. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Financial Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 56% stake.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Guan Chong 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.

Our information suggests that insiders maintain a significant holding in Guan Chong Berhad. It is very interesting to see that insiders have a meaningful RM1.0b stake in this RM5.1b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Guan Chong Berhad. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 53%, of the Guan Chong Berhad stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Guan Chong Berhad better, we need to consider many other factors. Be aware that Guan Chong Berhad is showing 2 warning signs in our investment analysis , you should know about...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.