To get a sense of who is truly in control of P.A. Resources Berhad (KLSE:PA), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 10% increase in the stock price last week, retail investors profited the most, but insiders who own 39% stock also stood to gain from the increase.
In the chart below, we zoom in on the different ownership groups of P.A. Resources Berhad.
What Does The Institutional Ownership Tell Us About P.A. Resources 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.
As you can see, institutional investors have a fair amount of stake in P.A. Resources Berhad. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of P.A. Resources Berhad, (below). Of course, keep in mind that there are other factors to consider, too.
KLSE:PA Earnings and Revenue Growth January 24th 2024
We note that hedge funds don't have a meaningful investment in P.A. Resources Berhad. Our data suggests that Kong Chan, who is also the company's Top Key Executive, holds the most number of shares at 7.8%. 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. In comparison, the second and third largest shareholders hold about 4.3% and 3.7% of the stock. Interestingly, the second-largest shareholder, Kuan Lau is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.
On studying our ownership data, we found that 25 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. 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 P.A. Resources Berhad
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 information suggests that insiders maintain a significant holding in P.A. Resources Berhad. Insiders own RM191m worth of shares in the RM485m company. 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 comprising of individual investors, collectively holds 50% of P.A. Resources Berhad shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with P.A. Resources Berhad , and understanding them should be part of your investment process.
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.
