Institutions own 33% of Kuala Lumpur Kepong Berhad (KLSE:KLK) shares but public companies control 48% of the company

Key Insights

• Significant control over Kuala Lumpur Kepong Berhad by public companies implies that the general public has more power to influence management and governance-related decisions
• 64% of the business is held by the top 2 shareholders
• Institutional ownership in Kuala Lumpur Kepong Berhad is 33%

Every investor in Kuala Lumpur Kepong Berhad (KLSE:KLK) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, institutions make up 33% of the company’s shareholders. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.

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

View our latest analysis for Kuala Lumpur Kepong Berhad

What Does The Institutional Ownership Tell Us About Kuala Lumpur Kepong 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.

As you can see, institutional investors have a fair amount of stake in Kuala Lumpur Kepong Berhad. 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. 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 Kuala Lumpur Kepong Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Kuala Lumpur Kepong Berhad. Our data shows that Batu Kawan Berhad is the largest shareholder with 48% of shares outstanding. Employees Provident Fund of Malaysia is the second largest shareholder owning 16% of common stock, and Permodalan Nasional Berhad holds about 4.3% of the company stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Kuala Lumpur Kepong Berhad

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our most recent data indicates that insiders own less than 1% of Kuala Lumpur Kepong Berhad. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own RM131m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 14% stake in Kuala Lumpur Kepong Berhad. 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.

Public Company Ownership

It appears to us that public companies own 48% of Kuala Lumpur Kepong Berhad. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Take risks for example - Kuala Lumpur Kepong Berhad has 2 warning signs we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.