Public companies invested in CJ ENM CO., Ltd. (KOSDAQ:035760) copped the brunt of last week's ₩100b market cap decline

Key Insights

• The considerable ownership by public companies in CJ ENM indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 50% of the company
• Institutional ownership in CJ ENM is 12%

Every investor in CJ ENM CO., Ltd. (KOSDAQ:035760) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to ₩1.2t last week, public companies would have faced the highest losses than any other shareholder groups of the company.

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

Check out our latest analysis for CJ ENM

What Does The Institutional Ownership Tell Us About CJ ENM?

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.

As you can see, institutional investors have a fair amount of stake in CJ ENM. 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 CJ ENM's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in CJ ENM. The company's largest shareholder is CJ Corporation, with ownership of 42%. Meanwhile, the second and third largest shareholders, hold 5.3% and 2.7%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of 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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of CJ ENM

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Shareholders would probably be interested to learn that insiders own shares in CJ ENM CO., Ltd.. In their own names, insiders own ₩33b worth of stock in the ₩1.2t company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CJ ENM. 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.

Public Company Ownership

We can see that public companies hold 48% of the CJ ENM shares on issue. 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:

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 - CJ ENM 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.