JAPAN MATERIAL Co., Ltd.'s (TSE:6055) largest shareholder, CEO Hisao Tanaka sees holdings value fall by 5.2% following recent drop

Key Insights

• Insiders appear to have a vested interest in JAPAN MATERIAL's growth, as seen by their sizeable ownership
• The top 8 shareholders own 52% of the company
• Institutions own 32% of JAPAN MATERIAL

A look at the shareholders of JAPAN MATERIAL Co., Ltd. (TSE:6055) can tell us which group is most powerful. The group holding the most number of shares in the company, around 34% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, insiders endured the biggest losses as the stock fell by 5.2%.

In the chart below, we zoom in on the different ownership groups of JAPAN MATERIAL.

See our latest analysis for JAPAN MATERIAL

What Does The Institutional Ownership Tell Us About JAPAN MATERIAL?

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

It would appear that 5.0% of JAPAN MATERIAL shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is the CEO Hisao Tanaka with 17% of shares outstanding. Tomokazu Tanaka is the second largest shareholder owning 14% of common stock, and 3D Investment Partners Pte. Ltd holds about 5.0% of the company stock. Interestingly, the second-largest shareholder, Tomokazu Tanaka is also Chief Technology Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

We did some more digging and found that 8 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 JAPAN MATERIAL

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 insiders maintain a significant holding in JAPAN MATERIAL Co., Ltd.. It has a market capitalization of just JP¥170b, and insiders have JP¥58b worth of shares in their own names. That's quite significant. 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

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over JAPAN MATERIAL. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand JAPAN MATERIAL better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.