Gravity Co., Ltd.'s (NASDAQ:GRVY) market cap surged US$32m last week, public companies who have a lot riding on the company were rewarded

By
Simply Wall St
Published
March 22, 2022
NasdaqGM:GRVY
Source: Shutterstock

Every investor in Gravity Co., Ltd. (NASDAQ:GRVY) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 59% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, public companies benefitted the most after the company's market cap rose by US$32m last week.

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

See our latest analysis for Gravity

ownership-breakdown
NasdaqGM:GRVY Ownership Breakdown March 22nd 2022

What Does The Institutional Ownership Tell Us About Gravity?

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.

We can see that Gravity does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Gravity, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGM:GRVY Earnings and Revenue Growth March 22nd 2022

Hedge funds don't have many shares in Gravity. Looking at our data, we can see that the largest shareholder is GungHo Online Entertainment, Inc. with 59% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Morgan Stanley, Investment Banking and Brokerage Investments is the second largest shareholder owning 4.0% of common stock, and Apis Capital Advisors, LLC holds about 0.6% of the company stock.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Gravity

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

We note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in Gravity. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

Public companies currently own 59% of Gravity stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Gravity , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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