GungHo Online Entertainment, Inc.'s (TSE:3765) market cap rose JP¥7.6b last week; retail investors who hold 46% profited and so did insiders

Key Insights

• GungHo Online Entertainment's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 15 shareholders own 50% of the company
• Insider ownership in GungHo Online Entertainment is 21%

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To get a sense of who is truly in control of GungHo Online Entertainment, Inc. (TSE:3765), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 46% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that benefitted the most from last week’s JP¥7.6b market cap gain, insiders too had a 21% share in those profits.

In the chart below, we zoom in on the different ownership groups of GungHo Online Entertainment.

Check out our latest analysis for GungHo Online Entertainment

What Does The Institutional Ownership Tell Us About GungHo Online Entertainment?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

We note that hedge funds don't have a meaningful investment in GungHo Online Entertainment. Looking at our data, we can see that the largest shareholder is Taizo Son with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.6% and 4.3%, of the shares outstanding, respectively. Additionally, the company's CEO Kazuki Morishita directly holds 1.9% of the total shares outstanding.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 GungHo Online Entertainment

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of GungHo Online Entertainment, Inc.. It is very interesting to see that insiders have a meaningful JP¥33b stake in this JP¥158b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 46% stake in GungHo Online Entertainment. 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 an ownership of 9.6%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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

Our data indicates that Private Companies hold 3.7%, of the company's shares. 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 example, we've discovered 2 warning signs for GungHo Online Entertainment (1 can't be ignored!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.