Ncsoft Corporation's (KRX:036570) market cap dropped ₩313b last week; individual investors who hold 46% were hit as were institutions

Key Insights

• The considerable ownership by retail investors in Ncsoft indicates that they collectively have a greater say in management and business strategy
• 50% of the business is held by the top 18 shareholders
• Insiders own 13% of Ncsoft

To get a sense of who is truly in control of Ncsoft Corporation (KRX:036570), 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 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 7.9% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 22% stock also took a hit.

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

See our latest analysis for Ncsoft

What Does The Institutional Ownership Tell Us About Ncsoft?

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.

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

Ncsoft is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Taek-Jin Kim with 13% of shares outstanding. Public Investment Fund is the second largest shareholder owning 10% of common stock, and Netmarble Corporation holds about 9.6% of the company stock.

A closer look at our ownership figures suggests that the top 18 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 Ncsoft

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 most recent data indicates that insiders own a reasonable proportion of Ncsoft Corporation. It is very interesting to see that insiders have a meaningful ₩474b stake in this ₩3.7t business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 46% 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.

Public Company Ownership

We can see that public companies hold 9.6% of the Ncsoft shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Ncsoft better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Ncsoft you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com