Public companies are REDtone Digital Berhad's (KLSE:REDTONE) biggest owners and were hit after market cap dropped RM100m

Key Insights

• The considerable ownership by public companies in REDtone Digital Berhad indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 52% of the company
• 18% of REDtone Digital Berhad is held by insiders

Every investor in REDtone Digital Berhad (KLSE:REDTONE) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 35% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, public companies endured the biggest losses as the stock fell by 18%.

In the chart below, we zoom in on the different ownership groups of REDtone Digital Berhad.

Check out our latest analysis for REDtone Digital Berhad

What Does The Institutional Ownership Tell Us About REDtone Digital 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.

We can see that REDtone Digital Berhad does have institutional investors; and they hold a good portion of the company's stock. 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 REDtone Digital Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in REDtone Digital Berhad. Our data shows that Berjaya Corporation Berhad is the largest shareholder with 35% of shares outstanding. Dymm Johar is the second largest shareholder owning 17% of common stock, and KAF Investment Funds Bhd. holds about 3.5% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of REDtone Digital Berhad

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders maintain a significant holding in REDtone Digital Berhad. Insiders own RM84m worth of shares in the RM464m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

Public companies currently own 35% of REDtone Digital Berhad stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand REDtone Digital Berhad better, we need to consider many other factors. For example, we've discovered 2 warning signs for REDtone Digital Berhad (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.