Painful week for sovereign wealth funds invested in Sime Darby Property Berhad (KLSE:SIMEPROP) after 4.3% drop, institutions also suffered losses

Key Insights

• The considerable ownership by sovereign wealth funds in Sime Darby Property Berhad indicates that they collectively have a greater say in management and business strategy
• Permodalan Nasional Berhad owns 56% of the company
• Institutional ownership in Sime Darby Property Berhad is 24%

To get a sense of who is truly in control of Sime Darby Property Berhad (KLSE:SIMEPROP), it is important to understand the ownership structure of the business. We can see that sovereign wealth funds own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of sovereign wealth funds took a hit after last week’s 4.3% price drop, institutions with their 24% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Sime Darby Property Berhad.

Check out our latest analysis for Sime Darby Property Berhad

What Does The Institutional Ownership Tell Us About Sime Darby Property 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.

Sime Darby Property Berhad already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Sime Darby Property Berhad's earnings history below. Of course, the future is what really matters.

Sime Darby Property Berhad is not owned by hedge funds. Permodalan Nasional Berhad is currently the company's largest shareholder with 56% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 6.5% and 3.0%, of the shares outstanding, respectively.

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 Sime Darby Property 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.

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 data suggests that insiders own under 1% of Sime Darby Property Berhad in their own names. Keep in mind that it's a big company, and the insiders own RM47m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 19% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sime Darby Property Berhad better, we need to consider many other factors. Take risks for example - Sime Darby Property Berhad has 1 warning sign we think you should be aware of.

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.

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