FFRI Security, Inc.'s (TSE:3692) 12% gain last week benefited both retail investors who own 53% as well as insiders

Key Insights

• Significant control over FFRI Security by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 7 investors have a majority stake in the company with 50% ownership
• Insider ownership in FFRI Security is 47%

A look at the shareholders of FFRI Security, Inc. (TSE:3692) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that reaped the most benefits after last week’s 12% price gain, insiders also received a 47% cut.

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

View our latest analysis for FFRI Security

What Does The Lack Of Institutional Ownership Tell Us About FFRI Security?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. FFRI Security's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in FFRI Security. The company's CEO Yuji Ukai is the largest shareholder with 24% of shares outstanding. Ryouji Kanai is the second largest shareholder owning 18% of common stock, and Shigeki Tanaka holds about 2.1% of the company stock. Note that two of the top three shareholders are also Chief Technology Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

We did some more digging and found that 7 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of FFRI Security

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. 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.

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 information suggests that insiders maintain a significant holding in FFRI Security, Inc.. It has a market capitalization of just JP¥23b, and insiders have JP¥11b worth of shares in their own names. 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, who are usually individual investors, hold a substantial 53% stake in FFRI Security, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand FFRI Security better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for FFRI Security you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.