Arent Inc. (TSE:5254) CEO Hiroki Kamobayashi's holdings dropped 15% in value as a result of the recent pullback

Key Insights

• Insiders appear to have a vested interest in Arent's growth, as seen by their sizeable ownership
• The top 3 shareholders own 52% of the company
• Institutions own 12% of Arent

Every investor in Arent Inc. (TSE:5254) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 59% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 15% decline in share price, insiders suffered the most losses.

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

See our latest analysis for Arent

What Does The Institutional Ownership Tell Us About Arent?

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.

Arent 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Arent, (below). Of course, keep in mind that there are other factors to consider, too.

Arent is not owned by hedge funds. With a 37% stake, CEO Hiroki Kamobayashi is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 7.8% and 7.0%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Arent

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

It seems that insiders own more than half the Arent Inc. stock. This gives them a lot of power. So they have a JP¥19b stake in this JP¥32b business. 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

The general public, who are usually individual investors, hold a 20% stake in Arent. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 7.0%, private equity firms could influence the Arent board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Arent better, we need to consider many other factors. For example, we've discovered 1 warning sign for Arent that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.