Great week for Socionext Inc. (TSE:6526) institutional investors after losing 39% over the previous year

Key Insights

• Institutions' substantial holdings in Socionext implies that they have significant influence over the company's share price
• 50% of the business is held by the top 23 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

If you want to know who really controls Socionext Inc. (TSE:6526), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors would appreciate the 10% increase in share price last week, given their one-year losses have totalled a disappointing 39%.

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

See our latest analysis for Socionext

What Does The Institutional Ownership Tell Us About Socionext?

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.

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

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Socionext is not owned by hedge funds. Nomura Asset Management Co., Ltd. is currently the company's largest shareholder with 9.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.7% and 4.8%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 23 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Socionext

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own less than 1% of Socionext Inc.. 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¥433m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Socionext. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Socionext better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Socionext .

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.