While institutions invested in Japan Pure Chemical Co.,Ltd. (TSE:4973) benefited from last week's 13% gain, retail investors stood to gain the most

Key Insights

• Japan Pure ChemicalLtd's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 10 shareholders
• 24% of Japan Pure ChemicalLtd is held by Institutions

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If you want to know who really controls Japan Pure Chemical Co.,Ltd. (TSE:4973), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Retail investors gained the most after market cap touched JP¥20b last week, while institutions who own 24% also benefitted.

Let's take a closer look to see what the different types of shareholders can tell us about Japan Pure ChemicalLtd.

See our latest analysis for Japan Pure ChemicalLtd

What Does The Institutional Ownership Tell Us About Japan Pure ChemicalLtd?

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.

Japan Pure ChemicalLtd 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. 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 Japan Pure ChemicalLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 21% of Japan Pure ChemicalLtd. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Hibiki Path Advisors Pte. Ltd. is the largest shareholder with 21% of shares outstanding. IBG LLC is the second largest shareholder owning 9.3% of common stock, and Burgundy Asset Management Ltd. holds about 4.3% of the company stock. In addition, we found that Tomoyuki Kojima, the CEO has 0.6% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Japan Pure ChemicalLtd

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can report that insiders do own shares in Japan Pure Chemical Co.,Ltd.. It has a market capitalization of just JP¥20b, and insiders have JP¥818m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 43% 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.

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. For instance, we've identified 1 warning sign for Japan Pure ChemicalLtd that you should be aware of.

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.