Retail investors invested in Elecom Co., Ltd. (TSE:6750) copped the brunt of last week's JP¥22b market cap decline

Explore Elecom's Fair Values from the Community and select yours

Key Insights

• Significant control over Elecom by retail investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 15 shareholders
• Insiders own 34% of Elecom

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Every investor in Elecom Co., Ltd. (TSE:6750) should be aware of the most powerful shareholder groups. With 46% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While insiders who own 34% came under pressure after market cap dropped to JP¥166b last week,retail investors took the most losses.

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

Check out our latest analysis for Elecom

What Does The Institutional Ownership Tell Us About Elecom?

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 Elecom. 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 Elecom, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Elecom. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Elecom's case, its Top Key Executive, Junji Hada, is the largest shareholder, holding 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.8% and 2.0%, of the shares outstanding, respectively.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Elecom

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. 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.

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 Elecom Co., Ltd.. Insiders own JP¥56b worth of shares in the JP¥166b company. That's quite meaningful. 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

With a 46% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Elecom. 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:

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 instance, we've identified 1 warning sign for Elecom that you should be aware of.

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.

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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.