Eco World Development Group Berhad's (KLSE:ECOWLD) stock price dropped 9.7% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in Eco World Development Group Berhad indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 50% of the company
• Insider ownership in Eco World Development Group Berhad is 20%

Every investor in Eco World Development Group Berhad (KLSE:ECOWLD) should be aware of the most powerful shareholder groups. With 48% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 20% shares weren’t spared from last week’s RM532m market cap drop, private companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Eco World Development Group Berhad.

Check out our latest analysis for Eco World Development Group Berhad

What Does The Institutional Ownership Tell Us About Eco World Development Group Berhad?

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.

As you can see, institutional investors have a fair amount of stake in Eco World Development Group Berhad. 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. 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 Eco World Development Group Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

Eco World Development Group Berhad is not owned by hedge funds. Our data shows that Syabas Tropikal Sdn Bhd is the largest shareholder with 33% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 7.4% of the stock. Kee Liew, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Eco World Development Group 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.

Our information suggests that insiders maintain a significant holding in Eco World Development Group Berhad. It has a market capitalization of just RM4.9b, and insiders have RM989m worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Eco World Development Group Berhad. 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 48%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.