Institutions profited after Denka Company Limited's (TSE:4061) market cap rose JP¥8.0b last week but individual investors profited the most

Key Insights

• The considerable ownership by individual investors in Denka indicates that they collectively have a greater say in management and business strategy
• 46% of the business is held by the top 25 shareholders
• Institutional ownership in Denka is 43%

If you want to know who really controls Denka Company Limited (TSE:4061), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual investors gained the most after market cap touched JP¥190b last week, while institutions who own 43% also benefitted.

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

See our latest analysis for Denka

What Does The Institutional Ownership Tell Us About Denka?

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.

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

Denka is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Nomura Asset Management Co., Ltd. with 6.1% of shares outstanding. The second and third largest shareholders are The Vanguard Group, Inc. and Mizuho Bank, Ltd, Retirement Benefit Trust, with an equal amount of shares to their name at 3.7%.

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.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Denka

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own less than 1% of Denka Company Limited. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own JP¥99m worth of shares. It is good to see board members owning shares, but 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 54% stake in Denka, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Denka better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Denka (of which 1 shouldn't be ignored!) you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.