Edarat Communication and Information Technology Co.'s (TADAWUL:9557) market cap surged ر.س113m last week, public companies who have a lot riding on the company were rewarded

Key Insights

• Significant control over Edarat Communication and Information Technology by public companies implies that the general public has more power to influence management and governance-related decisions
• A total of 2 investors have a majority stake in the company with 50% ownership
• 29% of Edarat Communication and Information Technology is held by insiders

Every investor in Edarat Communication and Information Technology Co. (TADAWUL:9557) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 40% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, public companies benefitted the most after the company's market cap rose by ر.س113m last week.

Let's delve deeper into each type of owner of Edarat Communication and Information Technology, beginning with the chart below.

Check out our latest analysis for Edarat Communication and Information Technology

What Does The Lack Of Institutional Ownership Tell Us About Edarat Communication and Information Technology?

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. 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. Edarat Communication and Information Technology'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.

Hedge funds don't have many shares in Edarat Communication and Information Technology. Our data shows that Al Moammar Information Systems Company is the largest shareholder with 40% of shares outstanding. The second and third largest shareholders are Erick Al Badawi and Adel Rizk, with an equal amount of shares to their name at 10%. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Vice Chairman, respectively, suggesting that these insiders have a personal stake in the company.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Edarat Communication and Information Technology

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Edarat Communication and Information Technology Co.. It has a market capitalization of just ر.س884m, and insiders have ر.س259m worth of shares in their own names. 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, who are usually individual investors, hold a 31% stake in Edarat Communication and Information Technology. 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 40% of the Edarat Communication and Information Technology 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 Edarat Communication and Information Technology better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Edarat Communication and Information Technology , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

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