Private companies in Scientex Berhad (KLSE:SCIENTX) are its biggest bettors, and their bets paid off as stock gained 4.2% last week

Key Insights

• Significant control over Scientex Berhad 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
• Insiders own 13% of Scientex Berhad

A look at the shareholders of Scientex Berhad (KLSE:SCIENTX) can tell us which group is most powerful. With 48% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies collectively scored the highest last week as the company hit RM6.9b market cap following a 4.2% gain in the stock.

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

Check out our latest analysis for Scientex Berhad

What Does The Institutional Ownership Tell Us About Scientex 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 Scientex Berhad does have institutional investors; and they hold a good portion of the company's stock. 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 Scientex Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

Scientex Berhad is not owned by hedge funds. Scientex Holdings Sdn Bhd is currently the company's largest shareholder with 21% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 9.1% of the stock. In addition, we found that Peng Jin Lim, the CEO has 3.6% of the shares allocated to their name.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Scientex 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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own a reasonable proportion of Scientex Berhad. It is very interesting to see that insiders have a meaningful RM891m stake in this RM6.9b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Scientex 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 Company Ownership

Our data indicates that Private Companies hold 48%, of the company's shares. 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 Scientex Berhad better, we need to consider many other factors. For example, we've discovered 1 warning sign for Scientex Berhad that you should be aware of before investing here.

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.