Is VS Industry Berhad (KLSE: VS) popular among insiders?


The large shareholder groups of VS Industry Berhad (KLSE: VS) have power over the company. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. Warren Buffett said he enjoys “a business with sustainable competitive advantages, led by skilled people and owner-centered.” So it’s nice to see some insider ownership as it may suggest that the management is owner-driven.

VS Industry Berhad has a market cap of RM5.0b, so we would expect some institutional investors to take notice of the action. Looking at our data on ownership groups (below), it appears that institutions are visible on the share register. We can zoom in on the different property groups, to find out more about VS Industry Berhad.

See our latest review for VS Industry Berhad

Breakdown of the KLSE property: VS June 2, 2021

What does institutional ownership tell us about VS Industry Berhad?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more excited about a stock once it’s included in a major index. We would expect most businesses to have some institutions listed, especially if they are growing.

As you can see, institutional investors own a large share of VS Industry Berhad. This suggests some credibility among professional investors. But we cannot rely on this fact alone because institutions sometimes make bad investments, like everyone else. When several institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, several parties may compete with each other to sell stocks quickly. This risk is higher in a company with no history of growth. You can see VS Industry Berhad’s historical revenue and revenue below, but keep in mind that there is always more to tell.

profit and revenue growth
KLSE: VS Profits and revenue growth June 2, 2021

We note that the hedge funds do not have a significant investment in VS Industry Berhad. From our data, we infer that the largest shareholder is Kim Beh (who also holds the title of Top Key Executive) with 13% of the shares outstanding. This is generally considered a good sign when insiders own a significant number of shares in the company, and in this case, we are happy to see a company insider playing the role of a key stakeholder. For context, the second largest shareholder owns around 9.1% of the outstanding shares, followed by a 6.9% stake by the third largest shareholder. In addition, the CEO of the company, Sem Gan, directly owns 5.1% of the total shares outstanding.

We also observed that the top 10 shareholders make up more than half of the share register, with a few smaller shareholders to some extent to balance the interests of the larger ones.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand the expected performance of a stock. There are a reasonable number of analysts covering the stock, so it can be helpful to know their overall vision for the future.

Insider property of VS Industry Berhad

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company is accountable to the board of directors and the board must represent the interests of the shareholders. Notably, sometimes senior executives themselves sit on the board of directors.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of VS Industry Berhad. It has a market capitalization of only RM5.0b, and insiders have RM1.3b of shares in their own name. It is quite important. Most would be happy to see the board invest alongside them. You may want to access this free chart showing recent insider trades.

General public property

With a 34% stake, the general public has some influence over VS Industry Berhad. While this size of ownership may not be enough to influence a policy decision in their favor, they can still have a collective impact on company policies.

Owned by a private company

It can be seen that private companies hold 6.8% of the shares issued. It may be worth pursuing the question further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the business.

Next steps:

While it is worth considering the different groups that own a business, there are other factors that are even more important. To do this, you need to know the 1 warning sign we spotted with VS Industry Berhad.

But finally it’s the future, not the past, which will determine the success of the owners of this business. Therefore, we believe it is advisable to take a look at this free report showing whether analysts are predicting a better future.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

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