While institutions invested in Kossan Rubber Industries Bhd (KLSE:KOSSAN) benefited from last week's 11% gain, private companies stood to gain the most

Key Insights

• Significant control over Kossan Rubber Industries Bhd by private companies implies that the general public has more power to influence management and governance-related decisions
• 52% of the business is held by the top 5 shareholders
• Insider ownership in Kossan Rubber Industries Bhd is 13%

To get a sense of who is truly in control of Kossan Rubber Industries Bhd (KLSE:KOSSAN), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 37% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While private companies were the group that benefitted the most from last week’s RM485m market cap gain, institutions too had a 27% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Kossan Rubber Industries Bhd.

See our latest analysis for Kossan Rubber Industries Bhd

What Does The Institutional Ownership Tell Us About Kossan Rubber Industries Bhd?

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.

Kossan Rubber Industries Bhd 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Kossan Rubber Industries Bhd's historic earnings and revenue below, but keep in mind there's always more to the story.

Kossan Rubber Industries Bhd is not owned by hedge funds. Our data shows that Kossan Holdings (M) Sdn Bhd is the largest shareholder with 35% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.9% and 5.1% of the stock. In addition, we found that Kuang Sia Lim, the CEO has 2.8% of the shares allocated to their name.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Kossan Rubber Industries Bhd

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.

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.

It seems insiders own a significant proportion of Kossan Rubber Industries Bhd. Insiders have a RM544m stake in this RM4.3b business. 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

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kossan Rubber Industries Bhd. 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 Company Ownership

We can see that Private Companies own 37%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Kossan Rubber Industries Bhd better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Kossan Rubber Industries Bhd you should be aware of.

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.