Institutions profited after Genetec Technology Berhad's (KLSE:GENETEC) market cap rose RM126m last week but individual investors profited the most

Key Insights

• The considerable ownership by individual investors in Genetec Technology Berhad indicates that they collectively have a greater say in management and business strategy
• A total of 20 investors have a majority stake in the company with 51% ownership
• Insiders own 17% of Genetec Technology Berhad

Every investor in Genetec Technology Berhad (KLSE:GENETEC) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 42% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 12% increase in the stock price last week, individual investors profited the most, but institutions who own 34% stock also stood to gain from the increase.

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

Check out our latest analysis for Genetec Technology Berhad

What Does The Institutional Ownership Tell Us About Genetec Technology 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.

Genetec Technology 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. 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 Genetec Technology Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Genetec Technology Berhad. The company's CEO Kem Chin is the largest shareholder with 7.6% of shares outstanding. For context, the second largest shareholder holds about 6.0% of the shares outstanding, followed by an ownership of 5.5% by the third-largest shareholder.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 20 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Genetec Technology 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.

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 most recent data indicates that insiders own a reasonable proportion of Genetec Technology Berhad. Insiders own RM201m worth of shares in the RM1.2b company. 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, who are usually individual investors, hold a 42% stake in Genetec Technology Berhad. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 6.7%, of the Genetec Technology Berhad stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Genetec Technology Berhad has 1 warning sign we think 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.

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.