Daido Steel Co., Ltd.'s (TSE:5471) market cap touched JP¥267b last week, benefiting both individual investors who own 43% as well as institutions

Key Insights

• Daido Steel's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 17 investors have a majority stake in the company with 50% ownership
• Institutional ownership in Daido Steel is 41%

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Every investor in Daido Steel Co., Ltd. (TSE:5471) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 43% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 3.3% price gain, institutions also received a 41% cut.

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

Check out our latest analysis for Daido Steel

What Does The Institutional Ownership Tell Us About Daido Steel?

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.

We can see that Daido Steel does have institutional investors; and they hold a good portion of the company's stock. 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 Daido Steel's earnings history below. Of course, the future is what really matters.

Daido Steel is not owned by hedge funds. The company's largest shareholder is Nippon Steel Corporation, with ownership of 5.3%. With 5.0% and 4.7% of the shares outstanding respectively, Meiji Yasuda Life Insurance Company, Asset Management Arm and Mizuho Financial Group, Inc., Asset Management Arm are the second and third largest shareholders.

After doing some more digging, we found that the top 17 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Daido Steel

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.

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 data suggests that insiders own under 1% of Daido Steel Co., Ltd. in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. 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¥263m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Daido Steel. 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.

Public Company Ownership

We can see that public companies hold 14% of the Daido Steel shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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 Daido Steel 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.