Retail investors in Nippon Densetsu Kogyo Co., Ltd. (TSE:1950) are its biggest bettors, and their bets paid off as stock gained 7.3% last week

Key Insights

• Significant control over Nippon Densetsu Kogyo by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 9 shareholders
• Institutional ownership in Nippon Densetsu Kogyo is 27%

A look at the shareholders of Nippon Densetsu Kogyo Co., Ltd. (TSE:1950) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 36% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, retail investors collectively scored the highest last week as the company hit JP¥112b market cap following a 7.3% gain in the stock.

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

Check out our latest analysis for Nippon Densetsu Kogyo

What Does The Institutional Ownership Tell Us About Nippon Densetsu Kogyo?

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.

As you can see, institutional investors have a fair amount of stake in Nippon Densetsu Kogyo. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Nippon Densetsu Kogyo, (below). Of course, keep in mind that there are other factors to consider, too.

Nippon Densetsu Kogyo is not owned by hedge funds. The company's largest shareholder is East Japan Railway Company, with ownership of 20%. Schroder Investment Management (Japan) Ltd. is the second largest shareholder owning 5.9% of common stock, and Nippon Densetsu Kogyo Co., Ltd., Mutual Prosperity Association holds about 5.2% of the company stock.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Nippon Densetsu Kogyo

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 data suggests that insiders own under 1% of Nippon Densetsu Kogyo Co., Ltd. in their own names. It has a market capitalization of just JP¥112b, and the board has only JP¥240m worth of shares in their own names. 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 36% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

Public companies currently own 28% of Nippon Densetsu Kogyo stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nippon Densetsu Kogyo better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Nippon Densetsu Kogyo , and understanding them should be part of your investment process.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.