NICHIDEN Corporation's (TSE:9902) market cap dropped JP¥7.7b last week; individual investors who hold 48% were hit as were institutions

Key Insights

• Significant control over NICHIDEN by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 13 investors have a majority stake in the company with 50% ownership
• Insiders own 15% of NICHIDEN

A look at the shareholders of NICHIDEN Corporation (TSE:9902) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 27% came under pressure after market cap dropped to JP¥97b last week,individual investors took the most losses.

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

See our latest analysis for NICHIDEN

What Does The Institutional Ownership Tell Us About NICHIDEN?

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.

As you can see, institutional investors have a fair amount of stake in NICHIDEN. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see NICHIDEN's historic earnings and revenue below, but keep in mind there's always more to the story.

NICHIDEN is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Nichiden Mutual Prosperity Association with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 8.2%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over 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 NICHIDEN

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of NICHIDEN Corporation. Insiders have a JP¥14b stake in this JP¥97b 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

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NICHIDEN. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with NICHIDEN .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.