Significantly high institutional ownership implies Bank Islam Malaysia Berhad's stock price is sensitive to their trading actions
64% of the business is held by the top 2 shareholders
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
If you want to know who really controls Bank Islam Malaysia Berhad (KLSE:BIMB), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 73% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
In the chart below, we zoom in on the different ownership groups of Bank Islam Malaysia Berhad.
What Does The Institutional Ownership Tell Us About Bank Islam Malaysia Berhad?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that Bank Islam Malaysia Berhad does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Bank Islam Malaysia Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.
KLSE:BIMB Earnings and Revenue Growth May 23rd 2023
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Bank Islam Malaysia Berhad. Lembaga Tabung Haji, Endowment Arm is currently the largest shareholder, with 48% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 13% by the third-largest shareholder.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Bank Islam Malaysia Berhad
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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 some shares in Bank Islam Malaysia Berhad. In their own names, insiders own RM95m worth of stock in the RM4.4b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Bank Islam Malaysia 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.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
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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