Kuala Lumpur Kepong Berhad's (KLSE:KLK) top owners are public companies with 48% stake, while 33% is held by institutions

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
• 63% of the business is held by the top 2 shareholders
• Institutions own 33% of Kuala Lumpur Kepong Berhad

If you want to know who really controls Kuala Lumpur Kepong Berhad (KLSE:KLK), then you'll have to look at the makeup of its share registry. With 48% stake, public companies possess the maximum shares in the company. 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. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.

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

Check out our latest analysis for Kuala Lumpur Kepong Berhad

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

Kuala Lumpur Kepong 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Kuala Lumpur Kepong Berhad's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Kuala Lumpur Kepong Berhad. Batu Kawan Berhad is currently the company's largest shareholder with 48% of shares outstanding. Employees Provident Fund of Malaysia is the second largest shareholder owning 15% 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 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 Kuala Lumpur Kepong Berhad

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our data suggests that insiders own under 1% of Kuala Lumpur Kepong Berhad in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around RM127m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or 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. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Kuala Lumpur Kepong Berhad (at least 2 which make us uncomfortable) , and understanding them should be part of your investment process.

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.