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Is Al-Samaani Factory For Metal Industries Co.’s (TADAWUL:1832) Shareholder Ownership Skewed Towards Insiders?

A look at the shareholders of Al-Samaani Factory For Metal Industries Co. (TADAWUL:1832) can tell us which group is most powerful. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. Warren Buffett said that he likes “a business with enduring competitive advantages that is run by able and owner-oriented people.” So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

Al-Samaani Factory For Metal Industries is a smaller company with a market capitalization of ر.س692m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions don’t own shares in the company. Let’s delve deeper into each type of owner, to discover more about Al-Samaani Factory For Metal Industries.

View our latest analysis for Al-Samaani Factory For Metal Industries

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SASE:1832 Ownership Breakdown January 11th 2021

What Does The Lack Of Institutional Ownership Tell Us About Al-Samaani Factory For Metal Industries?

We don’t tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Al-Samaani Factory For Metal Industries might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

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SASE:1832 Earnings and Revenue Growth January 11th 2021

We note that hedge funds don’t have a meaningful investment in Al-Samaani Factory For Metal Industries. From our data, we infer that the largest shareholder is Muhammad Abdullah Samaani (who also holds the title of Top Key Executive) with 23% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we’re glad to see a company insider play the role of a key stakeholder. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 6.1% by the third-largest shareholder. Interestingly, the second and third-largest shareholders also happen to be the Chief Executive Officer and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company’s top shareholders.

Our studies suggest that the top 4 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Al-Samaani Factory For Metal Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our information suggests that insiders maintain a significant holding in Al-Samaani Factory For Metal Industries Co.. It has a market capitalization of just ر.س692m, and insiders have ر.س279m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 60% of Al-Samaani Factory For Metal Industries shares. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Al-Samaani Factory For Metal Industries better, we need to consider many other factors. For example, we’ve discovered 1 warning sign for Al-Samaani Factory For Metal Industries that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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. 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.
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