REDtone Digital Berhad's (KLSE:REDTONE) market cap surged RM54m last week, public companies who have a lot riding on the company were rewarded

Key Insights

• REDtone Digital Berhad's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 63% of the business is held by the top 2 shareholders
• 20% of REDtone Digital Berhad is held by insiders

If you want to know who really controls REDtone Digital Berhad (KLSE:REDTONE), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 47% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, public companies were the biggest beneficiaries of last week’s 12% gain.

Let's take a closer look to see what the different types of shareholders can tell us about REDtone Digital Berhad.

Check out our latest analysis for REDtone Digital Berhad

What Does The Institutional Ownership Tell Us About REDtone Digital Berhad?

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.

We can see that REDtone Digital Berhad does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at REDtone Digital Berhad's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in REDtone Digital Berhad. The company's largest shareholder is Berjaya Corporation Berhad, with ownership of 45%. Dymm Johar is the second largest shareholder owning 17% of common stock, and Eastspring Investments (Singapore) Limited holds about 3.1% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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

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 information suggests that insiders maintain a significant holding in REDtone Digital Berhad. Insiders have a RM103m stake in this RM506m business. 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 24% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

We can see that public companies hold 47% of the REDtone Digital Berhad shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that REDtone Digital Berhad is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.