Sakai Chemical Industry Co., Ltd.'s (TSE:4078) high institutional ownership speaks for itself as stock continues to impress, up 10% over last week

Key Insights

• Given the large stake in the stock by institutions, Sakai Chemical Industry's stock price might be vulnerable to their trading decisions
• 50% of the business is held by the top 13 shareholders
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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If you want to know who really controls Sakai Chemical Industry Co., Ltd. (TSE:4078), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Last week’s 10% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. One-year return to shareholders is currently 23% and last week’s gain was the icing on the cake.

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

Check out our latest analysis for Sakai Chemical Industry

What Does The Institutional Ownership Tell Us About Sakai Chemical Industry?

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 Sakai Chemical Industry. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sakai Chemical Industry's earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 7.4% of Sakai Chemical Industry. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Zennor Asset Management LLP is currently the company's largest shareholder with 7.4% of shares outstanding. With 6.2% and 5.2% of the shares outstanding respectively, Sumitomo Mitsui Trust Asset Management Co., Ltd. and Simplex Asset Management Co., Ltd. are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Sakai Chemical Industry

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can report that insiders do own shares in Sakai Chemical Industry Co., Ltd.. As individuals, the insiders collectively own JP¥2.2b worth of the JP¥39b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Sakai Chemical Industry. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Sakai Chemical Industry .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.