In the wake of Yokogawa Electric Corporation's (TSE:6841) latest JP¥33b market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Significantly high institutional ownership implies Yokogawa Electric's stock price is sensitive to their trading actions
• 52% of the business is held by the top 14 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Our free stock report includes 1 warning sign investors should be aware of before investing in Yokogawa Electric. Read for free now.

Every investor in Yokogawa Electric Corporation (TSE:6841) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 65% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to JP¥747b last week after a 4.2% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 14% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Yokogawa Electric which might hurt individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Yokogawa Electric.

Check out our latest analysis for Yokogawa Electric

What Does The Institutional Ownership Tell Us About Yokogawa Electric?

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.

Yokogawa Electric already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Yokogawa Electric, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Yokogawa Electric. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 7.8% of shares outstanding. For context, the second largest shareholder holds about 6.6% of the shares outstanding, followed by an ownership of 5.2% by the third-largest shareholder.

After doing some more digging, we found that the top 14 have the combined ownership of 52% in the company, suggesting that no single shareholder has significant control over 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Yokogawa 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.

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 Yokogawa Electric Corporation insiders own under 1% of the company. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around JP¥444m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Yokogawa Electric. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Yokogawa Electric better, we need to consider many other factors. Take risks for example - Yokogawa Electric has 1 warning sign we think you should be aware of.

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.