Sanyo Shokai Ltd.'s (TSE:8011) market cap dropped JP¥3.4b last week; individual investors who hold 44% were hit as were institutions

Key Insights

• Significant control over Sanyo Shokai by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 12 shareholders
• Insider ownership in Sanyo Shokai is 12%

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A look at the shareholders of Sanyo Shokai Ltd. (TSE:8011) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 11% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 26% stock also took a hit.

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

View our latest analysis for Sanyo Shokai

What Does The Institutional Ownership Tell Us About Sanyo Shokai?

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.

We can see that Sanyo Shokai 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. 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 Sanyo Shokai's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Sanyo Shokai. The company's largest shareholder is Yagi Tsusho Limited, with ownership of 16%. For context, the second largest shareholder holds about 7.1% of the shares outstanding, followed by an ownership of 5.9% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Sanyo Shokai

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

It seems insiders own a significant proportion of Sanyo Shokai Ltd.. It has a market capitalization of just JP¥28b, and insiders have JP¥3.2b worth of shares in their own names. 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, who are usually individual investors, hold a 44% stake in Sanyo Shokai. 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.

Private Company Ownership

It seems that Private Companies own 16%, of the Sanyo Shokai stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 3.2% of the Sanyo Shokai shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Case in point: We've spotted 2 warning signs for Sanyo Shokai you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.