With a 62% stake, AYER Holdings Berhad (KLSE:AYER) insiders have a lot riding on the company
Simply Wall St
4 min read
Key Insights
Significant insider control over AYER Holdings Berhad implies vested interests in company growth
51% of the business is held by the top 3 shareholders
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of AYER Holdings Berhad (KLSE:AYER) can tell us which group is most powerful. With 62% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
So, insiders of AYER Holdings Berhad have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.
Let's take a closer look to see what the different types of shareholders can tell us about AYER Holdings Berhad.
What Does The Lack Of Institutional Ownership Tell Us About AYER Holdings Berhad?
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. AYER Holdings Berhad'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.
KLSE:AYER Earnings and Revenue Growth July 16th 2023
We note that hedge funds don't have a meaningful investment in AYER Holdings Berhad. Looking at our data, we can see that the largest shareholder is Kee Lim with 23% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 22% and 5.6%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 3 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. 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 AYER Holdings Berhad
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that insiders own more than half of AYER Holdings Berhad. This gives them effective control of the company. Given it has a market cap of RM531m, that means they have RM331m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over AYER Holdings Berhad. 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.
Private Company Ownership
We can see that Private Companies own 24%, of the shares on issue. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - AYER Holdings Berhad has 2 warning signs (and 1 which can't be ignored) we think you should know about.
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.
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