MonotaRO Co., Ltd.'s (TSE:3064) stock price dropped 4.3% last week; public companies would not be happy

Key Insights

• Significant control over MonotaRO 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 W.W. Grainger, Inc. with a 50% stake
• 24% of MonotaRO is held by Institutions

A look at the shareholders of MonotaRO Co., Ltd. (TSE:3064) can tell us which group is most powerful. The group holding the most number of shares in the company, around 50% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies as a group endured the highest losses last week after market cap fell by JP¥57b.

Let's delve deeper into each type of owner of MonotaRO, beginning with the chart below.

See our latest analysis for MonotaRO

What Does The Institutional Ownership Tell Us About MonotaRO?

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.

MonotaRO already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 MonotaRO, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in MonotaRO. W.W. Grainger, Inc. is currently the largest shareholder, with 50% of shares outstanding. This implies that they have majority interest control of the future of the company. Aristotle Capital Management, LLC is the second largest shareholder owning 2.6% of common stock, and Nomura Asset Management Co., Ltd. holds about 2.0% of the company stock.

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 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 MonotaRO

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.

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 data suggests that insiders own under 1% of MonotaRO Co., Ltd. in their own names. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own JP¥3.9b worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MonotaRO. 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

It appears to us that public companies own 50% of MonotaRO. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for MonotaRO 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.