While institutions invested in Nippon Paper Industries Co., Ltd. (TSE:3863) benefited from last week's 8.4% gain, individual investors stood to gain the most

Key Insights

• The considerable ownership by individual investors in Nippon Paper Industries indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 41% ownership
• Institutional ownership in Nippon Paper Industries is 35%

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If you want to know who really controls Nippon Paper Industries Co., Ltd. (TSE:3863), 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 individual investors with 60% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s JP¥10b market cap gain, institutions too had a 35% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Nippon Paper Industries.

See our latest analysis for Nippon Paper Industries

What Does The Institutional Ownership Tell Us About Nippon Paper Industries?

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 Nippon Paper Industries. 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 Nippon Paper Industries' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Nippon Paper Industries. Looking at our data, we can see that the largest shareholder is Mizuho Financial Group, Inc., Asset Management Arm with 6.0% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.3% and 4.1% of the 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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Nippon Paper Industries

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 information suggests that Nippon Paper Industries Co., Ltd. insiders own under 1% of the company. It seems the board members have no more than JP¥185m worth of shares in the JP¥130b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 60% stake in Nippon Paper Industries, 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nippon Paper Industries better, we need to consider many other factors. Take risks for example - Nippon Paper Industries has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.