Institutional investors control 74% of TH Plantations Berhad (KLSE:THPLANT) and were rewarded last week after stock increased 14%

Key Insights

• Institutions' substantial holdings in TH Plantations Berhad implies that they have significant influence over the company's share price
• 74% of the company is held by a single shareholder (Lembaga Tabung Haji, Endowment Arm)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in TH Plantations Berhad (KLSE:THPLANT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 74% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 14% last week. One-year return to shareholders is currently 20% and last week’s gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of TH Plantations Berhad.

View our latest analysis for TH Plantations Berhad

What Does The Institutional Ownership Tell Us About TH Plantations 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 TH Plantations Berhad does have institutional investors; and they hold a good portion of the company's stock. 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 TH Plantations Berhad's earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in TH Plantations Berhad. The company's largest shareholder is Lembaga Tabung Haji, Endowment Arm, with ownership of 74%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Goon Khing Kong is the second largest shareholder owning 4.6% of common stock, and Pok Dan Yayasan holds about 1.1% of the company stock.

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 TH Plantations Berhad

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

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.

We can report that insiders do own shares in TH Plantations Berhad. It has a market capitalization of just RM552m, and insiders have RM53m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand TH Plantations Berhad better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for TH Plantations Berhad (of which 1 is a bit concerning!) you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.