Public companies invested in Sumitomo Densetsu Co.,Ltd. (TSE:1949) copped the brunt of last week's JP¥8.8b market cap decline

Key Insights

• Significant control over Sumitomo DensetsuLtd by public companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is Sumitomo Electric Industries, Ltd. with a 51% stake
• Institutions own 18% of Sumitomo DensetsuLtd

If you want to know who really controls Sumitomo Densetsu Co.,Ltd. (TSE:1949), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 51% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to JP¥139b last week, public companies would have faced the highest losses than any other shareholder groups of the company.

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

Check out our latest analysis for Sumitomo DensetsuLtd

What Does The Institutional Ownership Tell Us About Sumitomo DensetsuLtd?

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.

As you can see, institutional investors have a fair amount of stake in Sumitomo DensetsuLtd. 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 Sumitomo DensetsuLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Sumitomo DensetsuLtd. Looking at our data, we can see that the largest shareholder is Sumitomo Electric Industries, Ltd. with 51% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 4.5% of the shares outstanding, followed by an ownership of 2.2% by the third-largest shareholder.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Sumitomo DensetsuLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Sumitomo Densetsu Co.,Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than JP¥399m worth of shares in the JP¥139b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 26% 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

We can see that public companies hold 51% of the Sumitomo DensetsuLtd shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Sumitomo DensetsuLtd has 1 warning sign we think you should be aware of.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com