Soracom, Inc.'s (TSE:147A) last week's 12% decline must have disappointed public companies who have a significant stake

Key Insights

• The considerable ownership by public companies in Soracom indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 56% of the company
• Insider ownership in Soracom is 17%

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If you want to know who really controls Soracom, Inc. (TSE:147A), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 53% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 12% decline in share price, public companies suffered the most losses.

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

View our latest analysis for Soracom

What Does The Institutional Ownership Tell Us About Soracom?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

Soracom is not owned by hedge funds. KDDI Corporation is currently the company's largest shareholder with 43% of shares outstanding. Wil, LLC is the second largest shareholder owning 7.2% of common stock, and Ken Tamagawa holds about 6.4% of the company stock. Ken Tamagawa, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 56% stake.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Soracom

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 insiders maintain a significant holding in Soracom, Inc.. It has a market capitalization of just JP¥37b, and insiders have JP¥6.1b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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.

Private Equity Ownership

With an ownership of 7.2%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.

Public Company Ownership

It appears to us that public companies own 53% of Soracom. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Take risks for example - Soracom 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.