Could AirAsia Group Berhad’s (KLSE:AIRASIA) Investor Composition Influence The Stock Price?

A look at the shareholders of AirAsia Group Berhad (KLSE:AIRASIA) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that have been privatized tend to have low insider ownership.

With a market capitalization of RM4.0b, AirAsia Group Berhad is a decent size, so it is probably on the radar of institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutions own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about AirAsia Group Berhad.

View our latest analysis for AirAsia Group Berhad

KLSE:AIRASIA Ownership Summary, February 17th 2020
KLSE:AIRASIA Ownership Summary, February 17th 2020

What Does The Institutional Ownership Tell Us About AirAsia Group 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.

AirAsia Group Berhad already has institutions on the share registry. Indeed, they own 23% of the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 AirAsia Group Berhad, (below). Of course, keep in mind that there are other factors to consider, too.

KLSE:AIRASIA Income Statement, February 17th 2020
KLSE:AIRASIA Income Statement, February 17th 2020

We note that hedge funds don’t have a meaningful investment in AirAsia Group Berhad. The company’s largest shareholder is Tune Live Sdn. Bhd., with ownership of 17%, Tune Group Sdn Bhd is the second largest shareholder with 15% of common stock, followed by Permodalan Nasional Berhad, holding 7.5% of the stock.

On studying the facts and figures more closely, we found that 8 of the top shareholders account for 51% 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of AirAsia Group Berhad

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our data suggests that insiders own under 1% of AirAsia Group Berhad in their own names. However, it’s possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than RM5.9m worth of shares in the RM4.0b company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, with a 37% stake in the company, will not easily be ignored. 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

It seems that Private Companies own 32%, of the AIRASIA stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we’ve spotted with AirAsia Group Berhad .

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.