Okamoto Industries, Inc.'s (TSE:5122) market cap dropped JP¥9.0b last week; individual investors who hold 46% were hit as were institutions

Key Insights

• Significant control over Okamoto Industries 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 19 shareholders
• Institutions own 33% of Okamoto Industries

Every investor in Okamoto Industries, Inc. (TSE:5122) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 9.1% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 33% stock also took a hit.

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

Check out our latest analysis for Okamoto Industries

What Does The Institutional Ownership Tell Us About Okamoto Industries?

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.

As you can see, institutional investors have a fair amount of stake in Okamoto 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Okamoto Industries, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Okamoto Industries. The company's largest shareholder is Meiji Yasuda Life Insurance Company, Asset Management Arm, with ownership of 8.6%. Meanwhile, the second and third largest shareholders, hold 8.3% and 5.0%, of the shares outstanding, respectively. Additionally, the company's CEO Kunihiko Okamoto directly holds 1.0% of the total shares outstanding.

After doing some more digging, we found that the top 19 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. 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 Okamoto Industries

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 see that insiders own shares in Okamoto Industries, Inc.. As individuals, the insiders collectively own JP¥2.6b worth of the JP¥91b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 46% 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

We can see that Private Companies own 7.7%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

We can see that public companies hold 8.3% of the Okamoto Industries 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Okamoto Industries is showing 1 warning sign in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free 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.