Kyokuto Kaihatsu Kogyo Co.,Ltd.'s (TSE:7226) market cap dropped JP¥7.6b last week; individual investors who hold 51% were hit as were institutions

Key Insights

• Significant control over Kyokuto Kaihatsu KogyoLtd by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 48% ownership
• 34% of Kyokuto Kaihatsu KogyoLtd is held by Institutions

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If you want to know who really controls Kyokuto Kaihatsu Kogyo Co.,Ltd. (TSE:7226), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 51% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of retail investors took a hit after last week’s 7.8% price drop, institutions with their 34% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Kyokuto Kaihatsu KogyoLtd.

View our latest analysis for Kyokuto Kaihatsu KogyoLtd

What Does The Institutional Ownership Tell Us About Kyokuto Kaihatsu KogyoLtd?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Kyokuto Kaihatsu KogyoLtd. 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 Kyokuto Kaihatsu KogyoLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Kyokuto Kaihatsu KogyoLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Mitsubishi UFJ Asset Management Co., Ltd. with 5.7% of shares outstanding. Strategic Capital, Inc. is the second largest shareholder owning 5.2% of common stock, and Sumitomo Mitsui Financial Group Inc., Asset Management Arm holds about 4.2% of the company stock.

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.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Kyokuto Kaihatsu KogyoLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Kyokuto Kaihatsu Kogyo Co.,Ltd.. In their own names, insiders own JP¥2.1b worth of stock in the JP¥90b 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 substantial 51% stake in Kyokuto Kaihatsu KogyoLtd, 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.

Private Equity Ownership

With an ownership of 5.2%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

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. For instance, we've identified 3 warning signs for Kyokuto Kaihatsu KogyoLtd (1 shouldn't be ignored) that you should be aware of.

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.