Private companies who hold 44% of Hong Seng Consolidated Berhad (KLSE:HONGSENG) gained 12%, insiders profited as well

Key Insights

• The considerable ownership by private companies in Hong Seng Consolidated Berhad indicates that they collectively have a greater say in management and business strategy
• The top 6 shareholders own 52% of the company
• 20% of Hong Seng Consolidated Berhad is held by insiders

If you want to know who really controls Hong Seng Consolidated Berhad (KLSE:HONGSENG), then you'll have to look at the makeup of its share registry. With 44% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 12% price gain, insiders also received a 20% cut.

Let's delve deeper into each type of owner of Hong Seng Consolidated Berhad, beginning with the chart below.

Check out our latest analysis for Hong Seng Consolidated Berhad

What Does The Institutional Ownership Tell Us About Hong Seng Consolidated 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.

Hong Seng Consolidated Berhad already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Hong Seng Consolidated Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

Hong Seng Consolidated Berhad is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Dalphon Limited with 12% of shares outstanding. CGS-CIMB Securities., Asset Management Arm is the second largest shareholder owning 12% of common stock, and Radiance Dynasty Sdn. Bhd. holds about 11% of the company stock.

We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Hong Seng Consolidated 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.

It seems insiders own a significant proportion of Hong Seng Consolidated Berhad. It has a market capitalization of just RM485m, and insiders have RM99m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 19% 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.

Private Company Ownership

We can see that Private Companies own 44%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hong Seng Consolidated Berhad better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Hong Seng Consolidated Berhad .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.