With 28% ownership in AeroEdge Co., Ltd. (TSE:7409), institutional investors have a lot riding on the business

Key Insights

• Given the large stake in the stock by institutions, AeroEdge's stock price might be vulnerable to their trading decisions
• The top 4 shareholders own 53% of the company
• 11% of AeroEdge is held by insiders

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A look at the shareholders of AeroEdge Co., Ltd. (TSE:7409) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 28% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional investors ended up benefitting the most after the company hit JP¥23b in market cap. One-year return to shareholders is currently 215% and last week’s gain was the icing on the cake.

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

View our latest analysis for AeroEdge

What Does The Institutional Ownership Tell Us About AeroEdge?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

AeroEdge 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. 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 AeroEdge's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in AeroEdge. Kikuchi Gear Co. Ltd is currently the company's largest shareholder with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 11% of the stock. Furthermore, CEO Jun Morinishi is the owner of 11% of the company's shares.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of AeroEdge

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of AeroEdge Co., Ltd.. Insiders have a JP¥2.5b stake in this JP¥23b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 19%, of the AeroEdge stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 22% of AeroEdge. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand AeroEdge better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with AeroEdge (at least 2 which are a bit concerning) , 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.