MSM Malaysia Holdings Berhad's (KLSE:MSM) market cap dropped RM288m last week; Public companies bore the brunt

Key Insights

• Significant control over MSM Malaysia Holdings Berhad by public companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is FGV Holdings Berhad with a 51% stake
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of MSM Malaysia Holdings Berhad (KLSE:MSM), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 53% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies as a group endured the highest losses last week after market cap fell by RM288m.

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

See our latest analysis for MSM Malaysia Holdings Berhad

What Does The Institutional Ownership Tell Us About MSM Malaysia Holdings 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.

As you can see, institutional investors have a fair amount of stake in MSM Malaysia Holdings Berhad. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 MSM Malaysia Holdings Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in MSM Malaysia Holdings Berhad. FGV Holdings Berhad is currently the company's largest shareholder with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 6.7% by the third-largest 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of MSM Malaysia Holdings Berhad

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Shareholders would probably be interested to learn that insiders own shares in MSM Malaysia Holdings Berhad. As individuals, the insiders collectively own RM64m worth of the RM1.8b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in MSM Malaysia Holdings Berhad. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 15%, private equity firms could influence the MSM Malaysia Holdings Berhad board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

We can see that public companies hold 53% of the MSM Malaysia Holdings Berhad shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand MSM Malaysia Holdings Berhad better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with MSM Malaysia Holdings Berhad (including 1 which is concerning) .

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.

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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.