Both individual investors who control a good portion of Kawasaki Heavy Industries, Ltd. (TSE:7012) along with institutions must be dismayed after last week's 12% decrease

Key Insights

• Significant control over Kawasaki Heavy Industries by individual investors implies that the general public has more power to influence management and governance-related decisions
• 44% of the business is held by the top 25 shareholders
• Institutions own 39% of Kawasaki Heavy Industries

Every investor in Kawasaki Heavy Industries, Ltd. (TSE:7012) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 39% shares weren’t spared from last week’s JP¥136b market cap drop, individual investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Kawasaki Heavy Industries.

Check out our latest analysis for Kawasaki Heavy Industries

What Does The Institutional Ownership Tell Us About Kawasaki Heavy Industries?

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.

Kawasaki Heavy 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. 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 Kawasaki Heavy Industries, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Kawasaki Heavy Industries. Looking at our data, we can see that the largest shareholder is Nomura Asset Management Co., Ltd. with 5.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.5% and 4.2%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Kawasaki Heavy Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Kawasaki Heavy Industries, Ltd. insiders own under 1% of the company. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around JP¥590m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 55% stake in Kawasaki Heavy Industries, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Kawasaki Heavy Industries is showing 4 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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