Institutional owners may consider drastic measures as giftee Inc.'s (TSE:4449) recent JP¥3.0b drop adds to long-term losses

Key Insights

• Significantly high institutional ownership implies giftee's stock price is sensitive to their trading actions
• A total of 6 investors have a majority stake in the company with 55% ownership
• Insider ownership in giftee is 35%

To get a sense of who is truly in control of giftee Inc. (TSE:4449), it is important to understand the ownership structure of the business. With 48% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to JP¥27b last week after a 10.0% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 27% might not go down well especially with this category of shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell giftee which might hurt individual investors.

Let's delve deeper into each type of owner of giftee, beginning with the chart below.

Check out our latest analysis for giftee

What Does The Institutional Ownership Tell Us About giftee?

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

giftee is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Mutsumi Ota with 18% of shares outstanding. The second and third largest shareholders are Fidelity International Ltd and Asset Management One Co., Ltd., with an equal amount of shares to their name at 9.5%.

We did some more digging and found that 6 of the top shareholders account for roughly 55% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of giftee

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.

It seems insiders own a significant proportion of giftee Inc.. Insiders have a JP¥9.4b stake in this JP¥27b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in giftee. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand giftee better, we need to consider many other factors. Be aware that giftee is showing 1 warning sign in our investment analysis , 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.