Significant control over Top Glove Corporation Bhd by retail investors implies that the general public has more power to influence management and governance-related decisions
A total of 10 investors have a majority stake in the company with 51% ownership
If you want to know who really controls Top Glove Corporation Bhd. (KLSE:TOPGLOV), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While the holdings of retail investors took a hit after last week’s 7.8% price drop, insiders with their 30% also suffered.
Let's take a closer look to see what the different types of shareholders can tell us about Top Glove Corporation Bhd.
What Does The Institutional Ownership Tell Us About Top Glove Corporation 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.
Top Glove Corporation 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. 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 Top Glove Corporation Bhd's historic earnings and revenue below, but keep in mind there's always more to the story.
earnings-and-revenue-growth
We note that hedge funds don't have a meaningful investment in Top Glove Corporation Bhd. Our data suggests that Wee Chai Lim, who is also the company's Top Key Executive, holds the most number of shares at 28%. 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. For context, the second largest shareholder holds about 6.9% of the shares outstanding, followed by an ownership of 3.8% by the third-largest shareholder.
On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 Top Glove Corporation Bhd
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. 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 Top Glove Corporation Bhd.. It is very interesting to see that insiders have a meaningful RM2.0b stake in this RM6.6b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 39% stake in Top Glove Corporation 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 8.8%, of the Top Glove Corporation Bhd stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
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.
