Digital Arts Inc.'s (TSE:2326) large institutional owners must be happy as stock continues to impress, up 9.3% over the past week

Key Insights

• Institutions' substantial holdings in Digital Arts implies that they have significant influence over the company's share price
• A total of 7 investors have a majority stake in the company with 52% ownership
• Insiders own 22% of Digital Arts

A look at the shareholders of Digital Arts Inc. (TSE:2326) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And things are looking up for institutional investors after the company gained JP¥7.6b in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 47%.

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

View our latest analysis for Digital Arts

What Does The Institutional Ownership Tell Us About Digital Arts?

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.

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

Digital Arts is not owned by hedge funds. With a 22% stake, CEO Toshio Dogu is the largest shareholder. With 7.7% and 5.2% of the shares outstanding respectively, Mirae Asset Global Investments Co., Ltd. and Legal & General Investment Management Limited are the second and third largest shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Digital Arts

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Digital Arts Inc.. Insiders have a JP¥20b stake in this JP¥89b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Digital Arts that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.