Painful week for private companies invested in Malaysian Pacific Industries Berhad (KLSE:MPI) after 3.3% drop, institutions also suffered losses

Key Insights

• The considerable ownership by private companies in Malaysian Pacific Industries Berhad indicates that they collectively have a greater say in management and business strategy
• 58% of the company is held by a single shareholder (Hong Leong Company (Malaysia) Berhad (Hlcm))
• 25% of Malaysian Pacific Industries Berhad is held by Institutions

If you want to know who really controls Malaysian Pacific Industries Berhad (KLSE:MPI), then you'll have to look at the makeup of its share registry. With 59% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of private companies took a hit after last week’s 3.3% price drop, institutions with their 25% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Malaysian Pacific Industries Berhad.

Check out our latest analysis for Malaysian Pacific Industries Berhad

What Does The Institutional Ownership Tell Us About Malaysian Pacific Industries 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.

Malaysian Pacific Industries 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. 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 Malaysian Pacific Industries Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Malaysian Pacific Industries Berhad. Looking at our data, we can see that the largest shareholder is Hong Leong Company (Malaysia) Berhad (Hlcm) with 58% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 5.4% and 3.5%, 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 Malaysian Pacific Industries Berhad

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in Malaysian Pacific Industries Berhad. The insiders have a meaningful stake worth RM78m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Malaysian Pacific Industries 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 59%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Malaysian Pacific Industries Berhad better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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