Chugoku Marine Paints, Ltd.'s (TSE:4617) market cap dropped JP¥9.9b last week; individual investors who hold 46% were hit as were institutions

Key Insights

• Chugoku Marine Paints' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 16 shareholders own 50% of the company
• Institutional ownership in Chugoku Marine Paints is 41%

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Every investor in Chugoku Marine Paints, Ltd. (TSE:4617) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 4.2% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 41% stock also took a hit.

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

See our latest analysis for Chugoku Marine Paints

What Does The Institutional Ownership Tell Us About Chugoku Marine Paints?

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.

Chugoku Marine Paints already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Chugoku Marine Paints' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Chugoku Marine Paints. The company's largest shareholder is Imabari Shipbuilding Co., Ltd., with ownership of 8.4%. Capital Research and Management Company is the second largest shareholder owning 6.8% of common stock, and Hirogin Holdings, Inc. holds about 4.9% of the company stock.

After doing some more digging, we found that the top 16 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Chugoku Marine Paints

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 most recent data indicates that insiders own less than 1% of Chugoku Marine Paints, Ltd.. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own JP¥767m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 46% stake in Chugoku Marine Paints. 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.

Private Company Ownership

Our data indicates that Private Companies hold 9.4%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. For instance, we've identified 1 warning sign for Chugoku Marine Paints that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.