SKP Resources Bhd (KLSE:SKPRES) has caught the attention of institutional investors who hold a sizeable 39% stake
editorial-team@simplywallst.com (Simply Wall St)
4 min read
Key Insights
Given the large stake in the stock by institutions, SKP Resources Bhd's stock price might be vulnerable to their trading decisions
A total of 4 investors have a majority stake in the company with 52% ownership
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
Every investor in SKP Resources Bhd (KLSE:SKPRES) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 39% 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. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
In the chart below, we zoom in on the different ownership groups of SKP Resources Bhd.
What Does The Institutional Ownership Tell Us About SKP Resources Bhd?
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.
SKP Resources Bhd already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 SKP Resources Bhd, (below). Of course, keep in mind that there are other factors to consider, too.
KLSE:SKPRES Earnings and Revenue Growth October 9th 2023
SKP Resources Bhd is not owned by hedge funds. The company's largest shareholder is Estate Of Gan Kim Huat, with ownership of 29%. In comparison, the second and third largest shareholders hold about 8.7% and 8.3% of the stock. Furthermore, CEO Poh Gan is the owner of 5.0% of the company's shares.
On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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 SKP Resources Bhd
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
We can see that insiders own shares in SKP Resources Bhd. It has a market capitalization of just RM1.6b, and insiders have RM81m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, who are usually individual investors, hold a 20% stake in SKP Resources Bhd. 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.
Private Company Ownership
It seems that Private Companies own 35%, of the SKP Resources Bhd stock. 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.
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.
