Painful week for public companies invested in MSM Malaysia Holdings Berhad (KLSE:MSM) after 15% drop, institutions also suffered losses

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
• FGV Holdings Berhad owns 51% of the company
• Institutional ownership in MSM Malaysia Holdings Berhad is 18%

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. With 53% 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.

While institutions, who own 18% shares weren’t spared from last week’s RM162m market cap drop, public companies as a group suffered the maximum losses

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

View our latest analysis for MSM Malaysia Holdings Berhad

What Does The Institutional Ownership Tell Us About MSM Malaysia Holdings 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 MSM Malaysia Holdings Berhad does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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.

We note that hedge funds don't have a meaningful investment in MSM Malaysia Holdings Berhad. The company's largest shareholder is FGV Holdings Berhad, with ownership of 51%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 15% and 9.1%, of the shares outstanding, respectively.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of MSM Malaysia Holdings Berhad

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Shareholders would probably be interested to learn that insiders own shares in MSM Malaysia Holdings Berhad. It has a market capitalization of just RM900m, and insiders have RM31m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MSM Malaysia Holdings 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.

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. 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:

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. Take risks for example - MSM Malaysia Holdings 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.