Public companies invested in Edarat Communication and Information Technology Co. (TADAWUL:9557) up 34% last week, insiders too were rewarded

Key Insights

• Edarat Communication and Information Technology's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 53% of the business is held by the top 2 shareholders
• Insider ownership in Edarat Communication and Information Technology is 40%

If you want to know who really controls Edarat Communication and Information Technology Co. (TADAWUL:9557), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 40% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

While public companies were the group that reaped the most benefits after last week’s 34% price gain, insiders also received a 40% cut.

Let's take a closer look to see what the different types of shareholders can tell us about Edarat Communication and Information Technology.

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 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 Edarat Communication and Information Technology, for yourself, below.

Hedge funds don't have many shares in Edarat Communication and Information Technology. Al Moammar Information Systems Company is currently the largest shareholder, with 40% of shares outstanding. The second and third largest shareholders are Adel Rizk and Erick Al Badawi, with an equal amount of shares to their name at 13%. Erick Al Badawi, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own a reasonable proportion of Edarat Communication and Information Technology Co.. It has a market capitalization of just ر.س389m, and insiders have ر.س156m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Edarat Communication and Information Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. Case in point: We've spotted 1 warning sign for Edarat Communication and Information Technology you should be aware of.

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.