Sanken Electric Co., Ltd.'s (TSE:6707) hedge funds investors lost 11% over the past week but have profited from longer-term gains

Key Insights

• Significantly high institutional ownership implies Sanken Electric's stock price is sensitive to their trading actions
• The top 5 shareholders own 52% of the company
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

If you want to know who really controls Sanken Electric Co., Ltd. (TSE:6707), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are hedge funds with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Hedge funds investors endured the highest losses after the company's market cap fell by JP¥16b last week. However, the 13% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

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

View our latest analysis for Sanken Electric

What Does The Institutional Ownership Tell Us About Sanken Electric?

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.

As you can see, institutional investors have a fair amount of stake in Sanken Electric. 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 Sanken Electric's earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 36% of Sanken Electric shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Effissimo Capital Management Pte Ltd. is currently the company's largest shareholder with 36% of shares outstanding. The second and third largest shareholders are Van Lanschot Kempen Investment Management N.V. and Resona Bank, Limited, with an equal amount of shares to their name at 4.7%.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Sanken Electric

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own less than 1% of Sanken Electric Co., Ltd.. It has a market capitalization of just JP¥133b, and the board has only JP¥51m 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-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. 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 Sanken Electric better, we need to consider many other factors. For example, we've discovered 2 warning signs for Sanken Electric (1 is significant!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.