Stock Analysis
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Institutions along with private companies who hold considerable shares inNEXON Co., Ltd. (TSE:3659) come under pressure; lose 7.0% of holdings value
Key Insights
- The considerable ownership by private companies in NEXON indicates that they collectively have a greater say in management and business strategy
- A total of 3 investors have a majority stake in the company with 60% ownership
- Institutions own 22% of NEXON
Every investor in NEXON Co., Ltd. (TSE:3659) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 30% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 7.0% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 22% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of NEXON.
See our latest analysis for NEXON
What Does The Institutional Ownership Tell Us About NEXON?
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.
We can see that NEXON does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 NEXON, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in NEXON. The company's largest shareholder is NXC Corporation, with ownership of 30%. Meanwhile, the second and third largest shareholders, hold 20% and 9.9%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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 NEXON
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. 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.
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.
Shareholders would probably be interested to learn that insiders own shares in NEXON Co., Ltd.. The insiders have a meaningful stake worth JP¥39b. we sometimes take an interest in whether they have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 17% stake in NEXON. 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 Equity Ownership
With a stake of 20%, private equity firms could influence the NEXON board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Private Company Ownership
It seems that Private Companies own 30%, of the NEXON stock. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 3 warning signs for NEXON that you should be aware of.
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.
Valuation is complex, but we're here to simplify it.
Discover if NEXON might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.
About TSE:3659
NEXON
Produces, develops, distributes, and services PC online and mobile games in Japan and internationally.