Riverstone Holdings Limited's (SGX:AP4) most bullish insider, CEO Teek Son Wong must be pleased with the recent 15% gain

Simply Wall St

Sun, Nov 13, 2022, 5:19 PM 4 min read

To get a sense of who is truly in control of Riverstone Holdings Limited (SGX:AP4), it is important to understand the ownership structure of the business. With 65% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit S$971m market cap following a 15% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Riverstone Holdings.

See our latest analysis for Riverstone Holdings

ownership-breakdown — SGX:AP4 Ownership Breakdown November 14th 2022

What Does The Institutional Ownership Tell Us About Riverstone Holdings?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Riverstone Holdings. 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 Riverstone Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — SGX:AP4 Earnings and Revenue Growth November 14th 2022

Riverstone Holdings is not owned by hedge funds. The company's CEO Teek Son Wong is the largest shareholder with 51% of shares outstanding. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. With 8.8% and 2.7% of the shares outstanding respectively, Wai Keong Lee and Teck Choon Wong are the second and third largest shareholders. Interestingly, the second and third-largest shareholders also happen to be the Top Key Executive and Alternate Director, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Riverstone Holdings

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. 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.

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.

It seems that insiders own more than half the Riverstone Holdings Limited stock. This gives them a lot of power. That means they own S$629m worth of shares in the S$971m company. That's quite meaningful. 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

The general public, who are usually individual investors, hold a 20% stake in Riverstone Holdings. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Riverstone Holdings (3 are significant) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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.

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

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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