Golden Agri-Resources Ltd (SGX:E5H) share price fell 3.6% last week; private companies would not be happy

To get an idea of ​​who actually controls Golden Agri-Resources Ltd (SGX:E5H), it is important to understand the ownership structure of the company. The group with the largest number of shares in the company, around 51% to be precise, are private companies. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

As market capitalization fell to S$3.4 billion last week, private companies would have suffered the highest losses than any other group of corporate shareholders.

In the table below, we zoom in on the different ownership groups of Golden Agri-Resources.

Check out our latest analysis for Golden Agri-Resources

SGX:E5H Ownership Distribution September 27, 2022

What does institutional ownership tell us about Golden Agri-Resources?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We see that Golden Agri-Resources has institutional investors; and they own a good part of the shares of the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past earnings trajectory of Golden Agri-Resources (below). Of course, keep in mind that there are other factors to consider as well.

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SGX: E5H Earnings and Revenue Growth September 27, 2022

Our data indicates that hedge funds own 5.0% of Golden Agri-Resources. This is worth noting, as hedge funds are often quite active investors, who may try to influence management. Many want value creation (and a rise in share price) in the short to medium term. Looking at our data, we can see that the major shareholder is PT Sinar Mas Group with 51% of the outstanding shares. This essentially means that they have considerable influence, if not absolute control, over the future of the company. In comparison, the second and third shareholders hold approximately 12% and 5.0% of the shares.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider Ownership of Golden Agri-Resources

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our information suggests that insiders of Golden Agri-Resources Ltd own less than 1% of the company. But they may have an indirect interest through a corporate structure that we have not noted. Keep in mind that this is a big company and insiders own shares worth S$93,000. The absolute value can be more important than the proportional share. It’s good to see board members owning stock, but it can be helpful to check whether those insiders have bought.

General public property

The general public, who are usually individual investors, hold a 25% stake in Golden Agri-Resources. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Private Company Ownership

Our data indicates that private companies hold 51% of the shares of society. Private companies can be related parties. Sometimes insiders have an interest in a public company through an equity stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Take risks for example – Golden Agri-Resources has 3 warning signs (and 1 which is a little obnoxious) that we think you should know about.

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Karen J. Nelson