Nippon Shinyaku Co., Ltd.'s (TSE:4516) market cap dropped JP¥23b last week; individual investors who hold 52% were hit as were institutions

Key Insights

• The considerable ownership by individual investors in Nippon Shinyaku indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 47% ownership
• Institutions own 48% of Nippon Shinyaku

Every investor in Nippon Shinyaku Co., Ltd. (TSE:4516) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 8.0% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 48% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Nippon Shinyaku.

See our latest analysis for Nippon Shinyaku

What Does The Institutional Ownership Tell Us About Nippon Shinyaku?

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.

Nippon Shinyaku already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Nippon Shinyaku's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Nippon Shinyaku. The company's largest shareholder is Meiji Yasuda Life Insurance Company, Asset Management Arm, with ownership of 9.6%. The Bank of Kyoto, Ltd., Asset Management Arm is the second largest shareholder owning 4.6% of common stock, and MUFG Bank, Ltd.,Investment Banking Arm holds about 4.0% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Nippon Shinyaku

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our data suggests that insiders own under 1% of Nippon Shinyaku Co., Ltd. in their own names. 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¥401m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 52% stake in Nippon Shinyaku, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Nippon Shinyaku (of which 1 is significant!) you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.