Institutions profited after Shibaura Mechatronics Corporation's (TSE:6590) market cap rose JP¥17b last week but retail investors profited the most

Key Insights

• Shibaura Mechatronics' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 25 investors have a majority stake in the company with 44% ownership
• Institutions own 37% of Shibaura Mechatronics

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To get a sense of who is truly in control of Shibaura Mechatronics Corporation (TSE:6590), 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 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Retail investors gained the most after market cap touched JP¥85b last week, while institutions who own 37% also benefitted.

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

Check out our latest analysis for Shibaura Mechatronics

What Does The Institutional Ownership Tell Us About Shibaura Mechatronics?

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.

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

We note that hedge funds don't have a meaningful investment in Shibaura Mechatronics. Looking at our data, we can see that the largest shareholder is Shin-Etsu Chemical Co., Ltd. with 5.9% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.5% and 4.3% of the stock.

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 studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Shibaura Mechatronics

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our data suggests that insiders own under 1% of Shibaura Mechatronics Corporation in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about JP¥181m worth of stock. This compares to a market capitalization of JP¥85b. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 54% of Shibaura Mechatronics shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Public Company Ownership

It appears to us that public companies own 5.9% of Shibaura Mechatronics. 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. Be aware that Shibaura Mechatronics is showing 2 warning signs in our investment analysis , and 1 of those is significant...

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.