Watani Iron Steel Company (TADAWUL:9513) insiders, who hold 56% of the firm would be disappointed by the recent pullback

Key Insights

• Insiders appear to have a vested interest in Watani Iron Steel's growth, as seen by their sizeable ownership
• The top 2 shareholders own 50% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Watani Iron Steel Company (TADAWUL:9513), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 56% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to ر.س487m last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Watani Iron Steel.

View our latest analysis for Watani Iron Steel

What Does The Lack Of Institutional Ownership Tell Us About Watani Iron Steel?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Watani Iron Steel's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Watani Iron Steel is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Abdulkarim Bin Mohammad Abdulaziz Al-Rajhi with 35% of shares outstanding. With 15% and 5.0% of the shares outstanding respectively, Yousef Mohammed Al-Turaif and Al Kafa'a Real Estate Investments Company are the second and third largest shareholders. Yousef Mohammed Al-Turaif, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 50% stake.

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 Watani Iron Steel

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.

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 information suggests that insiders own more than half of Watani Iron Steel Company. This gives them effective control of the company. That means they own ر.س273m worth of shares in the ر.س487m company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Watani Iron Steel. 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.

Private Company Ownership

Our data indicates that Private Companies hold 10%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Watani Iron Steel (of which 1 is a bit concerning!) you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.