Globetronics Technology Bhd's (KLSE:GTRONIC) latest 10% decline adds to one-year losses, institutional investors may consider drastic measures

By
Simply Wall St
Published
November 22, 2021
KLSE:GTRONIC
Source: Shutterstock

Every investor in Globetronics Technology Bhd (KLSE:GTRONIC) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, institutional investors endured the highest losses last week after market cap fell by RM141m. The recent loss, which adds to a one-year loss of 30% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell Globetronics Technology Bhd, which might have negative implications on individual investors.

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

See our latest analysis for Globetronics Technology Bhd

ownership-breakdown
KLSE:GTRONIC Ownership Breakdown November 23rd 2021

What Does The Institutional Ownership Tell Us About Globetronics Technology Bhd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Globetronics Technology Bhd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Globetronics Technology Bhd, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
KLSE:GTRONIC Earnings and Revenue Growth November 23rd 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Globetronics Technology Bhd is not owned by hedge funds. Employees Provident Fund of Malaysia is currently the largest shareholder, with 19% of shares outstanding. For context, the second largest shareholder holds about 7.1% of the shares outstanding, followed by an ownership of 5.8% by the third-largest shareholder. Kweng Ng, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

We did some more digging and found that 9 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Globetronics Technology Bhd

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.

We can report that insiders do own shares in Globetronics Technology Bhd. It has a market capitalization of just RM1.2b, and insiders have RM83m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Globetronics Technology 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 7.1%, 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Globetronics Technology Bhd , and understanding them should be part of your investment process.

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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