Significant control over British American Tobacco (Malaysia) Berhad by private companies implies that the general public has more power to influence management and governance-related decisions
The largest shareholder of the company is British American Tobacco Holdings Malaysia B V with a 50% stake
Every investor in British American Tobacco (Malaysia) Berhad (KLSE:BAT) should be aware of the most powerful shareholder groups. With 52% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And individual investors on the other hand have a 30% ownership in the company.
Let's delve deeper into each type of owner of British American Tobacco (Malaysia) Berhad, beginning with the chart below.
What Does The Institutional Ownership Tell Us About British American Tobacco (Malaysia) Berhad?
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 British American Tobacco (Malaysia) Berhad. 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 British American Tobacco (Malaysia) Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.
KLSE:BAT Earnings and Revenue Growth October 14th 2023
Hedge funds don't have many shares in British American Tobacco (Malaysia) Berhad. Our data shows that British American Tobacco Holdings Malaysia B V is the largest shareholder with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. Yu Yeh Tan is the second largest shareholder owning 3.5% of common stock, and Heng Lee Cheng holds about 2.1% of the company stock.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of British American Tobacco (Malaysia) Berhad
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
It seems insiders own a significant proportion of British American Tobacco (Malaysia) Berhad. It has a market capitalization of just RM2.8b, and insiders have RM303m worth of shares in their own names. 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, who are usually individual investors, hold a 30% stake in British American Tobacco (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.
Private Company Ownership
We can see that Private Companies own 52%, 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:
It's always worth thinking about the different groups who own shares in a company. But to understand British American Tobacco (Malaysia) Berhad better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with British American Tobacco (Malaysia) Berhad , and understanding them should be part of your investment process.
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.
