Are Institutions Heavily Invested In The Saudi British Bank's (TADAWUL:1060) Shares?

By
Simply Wall St
Published
November 18, 2021
SASE:1060
Source: Shutterstock

A look at the shareholders of The Saudi British Bank (TADAWUL:1060) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.

Saudi British Bank has a market capitalization of ر.س69b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Saudi British Bank.

View our latest analysis for Saudi British Bank

ownership-breakdown
SASE:1060 Ownership Breakdown November 19th 2021

What Does The Institutional Ownership Tell Us About Saudi British Bank?

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.

Saudi British Bank 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 Saudi British Bank's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
SASE:1060 Earnings and Revenue Growth November 19th 2021

Hedge funds don't have many shares in Saudi British Bank. HSBC Holdings plc is currently the largest shareholder, with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 20% and 6.4% of the 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Saudi British Bank

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 data suggests that insiders own under 1% of The Saudi British Bank in their own names. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own ر.س496m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Saudi British Bank. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 31% of the Saudi British Bank 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Saudi British Bank better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Saudi British Bank you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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