Is Arab Sea Information System Co.'s (TADAWUL:9505) Shareholder Ownership Skewed Towards Insiders?

A look at the shareholders of Arab Sea Information System Co. (TADAWUL:9505) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Arab Sea Information System is a smaller company with a market capitalization of ر.س880m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. Let's delve deeper into each type of owner, to discover more about Arab Sea Information System.

Check out our latest analysis for Arab Sea Information System

What Does The Lack Of Institutional Ownership Tell Us About Arab Sea Information System?

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 are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Arab Sea Information System, for yourself, below.

We note that hedge funds don't have a meaningful investment in Arab Sea Information System. Our data suggests that Mouhammed Bin Saleh Al Suhibani, who is also the company's Top Key Executive, holds the most number of shares at 23%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Biji Limited Co is the second largest shareholder owning 15% of common stock, and Haitham Bin Mouhammed Al Saleh Al Suhibani holds about 2.8% of the company stock. Interestingly, the third-largest shareholder, Haitham Bin Mouhammed Al Saleh Al Suhibani is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On studying our ownership data, we found that 8 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Arab Sea Information System

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.

It seems insiders own a significant proportion of Arab Sea Information System Co.. Insiders have a ر.س238m stake in this ر.س880m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public -- mostly retail investors -- own 58% of Arab Sea Information System. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 15%, of the Arab Sea Information System 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Arab Sea Information System 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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