Nitto Kohki Co., Ltd.'s (TSE:6151) stock price dropped 15% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in Nitto Kohki indicates that they collectively have a greater say in management and business strategy
• A total of 3 investors have a majority stake in the company with 56% ownership
• Institutions own 12% of Nitto Kohki

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Every investor in Nitto Kohki Co., Ltd. (TSE:6151) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 41% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by JP¥5.7b.

In the chart below, we zoom in on the different ownership groups of Nitto Kohki.

View our latest analysis for Nitto Kohki

What Does The Institutional Ownership Tell Us About Nitto Kohki?

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.

Nitto Kohki already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Nitto Kohki's earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 15% of Nitto Kohki. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Niki K.K. is the largest shareholder with 39% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 10% and 6.5%, of the shares outstanding, respectively. Yoko Takata, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Nitto Kohki

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Shareholders would probably be interested to learn that insiders own shares in Nitto Kohki Co., Ltd.. It has a market capitalization of just JP¥32b, and insiders have JP¥2.2b worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in Nitto Kohki. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 41%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nitto Kohki better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Nitto Kohki you should be aware of, and 1 of them is a bit concerning.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.