Key Insights
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Significant insider control over UWC Berhad implies vested interests in company growth
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A total of 2 investors have a majority stake in the company with 60% ownership
Every investor in UWC Berhad ( KLSE:UWC ) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 63% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Clearly, insiders benefitted the most after the company's market cap rose by RM397m last week.
Let's take a closer look to see what the different types of shareholders can tell us about UWC Berhad.
Check out our latest analysis for UWC Berhad
What Does The Institutional Ownership Tell Us About UWC 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.
UWC Berhad 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. 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 UWC Berhad's historic earnings and revenue below, but keep in mind there's always more to the story.
UWC Berhad is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In UWC Berhad's case, its Chief Operating Officer, Chee Lau, is the largest shareholder, holding 32% of shares outstanding. Chai Ng is the second largest shareholder owning 29% of common stock, and Employees Provident Fund of Malaysia holds about 6.2% of the company stock. Interestingly, the second-largest shareholder, Chai Ng is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of UWC Berhad
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.
Our most recent data indicates that insiders own the majority of UWC Berhad. This means they can collectively make decisions for the company. Insiders own RM3.1b worth of shares in the RM5.0b company. That's extraordinary! Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.
General Public Ownership
The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand UWC Berhad better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for UWC Berhad you should know about.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future .
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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.
