Retail investors among Sumitomo Rubber Industries, Ltd.'s (TSE:5110) largest shareholders, saw gain in holdings value after stock jumped 4.7% last week

Key Insights

• Significant control over Sumitomo Rubber Industries by retail investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 10 shareholders
• Institutions own 29% of Sumitomo Rubber Industries

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To get a sense of who is truly in control of Sumitomo Rubber Industries, Ltd. (TSE:5110), it is important to understand the ownership structure of the business. With 42% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, retail investors collectively scored the highest last week as the company hit JP¥595b market cap following a 4.7% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Sumitomo Rubber Industries.

See our latest analysis for Sumitomo Rubber Industries

What Does The Institutional Ownership Tell Us About Sumitomo Rubber Industries?

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.

Sumitomo Rubber Industries 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sumitomo Rubber Industries' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Sumitomo Rubber Industries. Sumitomo Electric Industries, Ltd. is currently the largest shareholder, with 29% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.7% and 2.8%, of the shares outstanding, respectively.

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 Sumitomo Rubber 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.

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 information suggests that Sumitomo Rubber Industries, Ltd. insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own JP¥604m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 42% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 29% of Sumitomo Rubber Industries stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sumitomo Rubber Industries better, we need to consider many other factors. For example, we've discovered 2 warning signs for Sumitomo Rubber Industries that you should be aware of before investing here.

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.

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.