Public companies among Nippon Sharyo, Ltd.'s (TSE:7102) largest shareholders, saw gain in holdings value after stock jumped 13% last week

Key Insights

• Nippon Sharyo's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 52% of the company is held by a single shareholder (Central Japan Railway Company)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Nippon Sharyo, Ltd. (TSE:7102) should be aware of the most powerful shareholder groups. We can see that public companies own the lion's share in the company with 52% 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, public companies collectively scored the highest last week as the company hit JP¥40b market cap following a 13% gain in the stock.

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

See our latest analysis for Nippon Sharyo

What Does The Institutional Ownership Tell Us About Nippon Sharyo?

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.

We can see that Nippon Sharyo does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Nippon Sharyo's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Nippon Sharyo. Central Japan Railway Company is currently the company's largest shareholder with 52% 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 1.9% of the shares outstanding, followed by an ownership of 1.8% 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Nippon Sharyo

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Nippon Sharyo, Ltd.. In their own names, insiders own JP¥790m worth of stock in the JP¥40b company. Some would say this shows alignment of interests between shareholders and the board. 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 35% stake in Nippon Sharyo. 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 52% of Nippon Sharyo 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Nippon Sharyo , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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