Private companies who have a significant stake must be disappointed along with institutions after Malaysian Pacific Industries Berhad's (KLSE:MPI) market cap dropped by RM258m

Key Insights

• Significant control over Malaysian Pacific Industries Berhad by private companies implies that the general public has more power to influence management and governance-related decisions
• 58% of the company is held by a single shareholder (Hong Leong Company (Malaysia) Berhad (Hlcm))
• 26% of Malaysian Pacific Industries Berhad is held by Institutions

To get a sense of who is truly in control of Malaysian Pacific Industries Berhad (KLSE:MPI), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 26% shares weren’t spared from last week’s RM258m 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 Malaysian Pacific Industries Berhad.

View 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 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 Malaysian Pacific Industries 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 Malaysian Pacific Industries Berhad. Our data shows that Hong Leong Company (Malaysia) Berhad (Hlcm) is the largest shareholder 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. The second and third largest shareholders are Eastspring Investments (Singapore) Limited and Employees Provident Fund of Malaysia, with an equal amount of shares to their name at 5.0%.

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 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 RM94m. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Malaysian Pacific Industries 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

We can see that Private Companies own 59%, 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.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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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.