Public companies in Torii Pharmaceutical Co., Ltd. (TSE:4551) are its biggest bettors, and their bets paid off as stock gained 6.6% last week

Key Insights

• Significant control over Torii Pharmaceutical by public companies implies that the general public has more power to influence management and governance-related decisions
• Japan Tobacco Inc. owns 55% of the company
• Institutional ownership in Torii Pharmaceutical is 21%

To get a sense of who is truly in control of Torii Pharmaceutical Co., Ltd. (TSE:4551), it is important to understand the ownership structure of the business. With 55% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies were the biggest beneficiaries of last week’s 6.6% gain.

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

See our latest analysis for Torii Pharmaceutical

What Does The Institutional Ownership Tell Us About Torii Pharmaceutical?

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 Torii Pharmaceutical 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 Torii Pharmaceutical's earnings history below. Of course, the future is what really matters.

Torii Pharmaceutical is not owned by hedge funds. Japan Tobacco Inc. is currently the company's largest shareholder with 55% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 4.9% of the shares outstanding, followed by an ownership of 3.4% by the third-largest 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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Torii Pharmaceutical

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.

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.

Our information suggests that Torii Pharmaceutical Co., Ltd. insiders own under 1% of the company. It has a market capitalization of just JP¥125b, and the board has only JP¥99m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in Torii Pharmaceutical. 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 55% of the Torii Pharmaceutical 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Torii Pharmaceutical better, we need to consider many other factors. Be aware that Torii Pharmaceutical is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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.