Retail investors who have a significant stake must be disappointed along with institutions after Nippon Chemi-Con Corporation's (TSE:6997) market cap dropped by JP¥2.7b

Key Insights

• Significant control over Nippon Chemi-Con by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 48% of the company
• Institutional ownership in Nippon Chemi-Con is 33%

To get a sense of who is truly in control of Nippon Chemi-Con Corporation (TSE:6997), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 33% shares weren’t spared from last week’s JP¥2.7b market cap drop, retail investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Nippon Chemi-Con.

View our latest analysis for Nippon Chemi-Con

What Does The Institutional Ownership Tell Us About Nippon Chemi-Con?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Nippon Chemi-Con does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Nippon Chemi-Con's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Nippon Chemi-Con. The company's largest shareholder is Samyoung Electronics Co., Ltd, with ownership of 7.6%. With 5.2% and 4.4% of the shares outstanding respectively, Arcus Investment Ltd. and Nomura Asset Management Co., Ltd. are the second and third largest shareholders.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Nippon Chemi-Con

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Nippon Chemi-Con Corporation insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about JP¥3.8m worth of stock. This compares to a market capitalization of JP¥20b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 56% of Nippon Chemi-Con shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Public Company Ownership

Public companies currently own 9.1% of Nippon Chemi-Con stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

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

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.