Institutional investors may adopt severe steps after Fukuda Denshi Co., Ltd.'s (TSE:6960) latest 9.2% drop adds to a year losses

Key Insights

• Given the large stake in the stock by institutions, Fukuda Denshi's stock price might be vulnerable to their trading decisions
• 51% of the business is held by the top 8 shareholders
• Insider ownership in Fukuda Denshi is 23%

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If you want to know who really controls Fukuda Denshi Co., Ltd. (TSE:6960), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 9.2% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 5.5% might not go down well especially with this category of shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Fukuda Denshi which might hurt individual investors.

Let's delve deeper into each type of owner of Fukuda Denshi, beginning with the chart below.

View our latest analysis for Fukuda Denshi

What Does The Institutional Ownership Tell Us About Fukuda Denshi?

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.

Fukuda Denshi already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Fukuda Denshi's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Fukuda Denshi. Looking at our data, we can see that the largest shareholder is the CEO Kotaro Fukuda with 20% of shares outstanding. FMR LLC is the second largest shareholder owning 6.6% of common stock, and Nissay Asset Management Corporation holds about 5.2% of the company stock.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Fukuda Denshi

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.

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 information suggests that insiders maintain a significant holding in Fukuda Denshi Co., Ltd.. It has a market capitalization of just JP¥167b, and insiders have JP¥39b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. 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.

Private Company Ownership

It seems that Private Companies own 3.5%, of the Fukuda Denshi 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.

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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Fukuda Denshi you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future .

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.