HS Holdings Co., Ltd.'s (TSE:8699) market cap touched JP¥36b last week, benefiting both private equity firms who own 42% as well as institutions

Key Insights

• HS Holdings' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 56% of the company
• Institutions own 33% of HS Holdings

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To get a sense of who is truly in control of HS Holdings Co., Ltd. (TSE:8699), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 42% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).

While private equity firms were the group that benefitted the most from last week’s JP¥3.6b market cap gain, institutions too had a 33% share in those profits.

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

See our latest analysis for HS Holdings

What Does The Institutional Ownership Tell Us About HS Holdings?

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.

HS Holdings 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. 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 HS Holdings' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in HS Holdings. META Capital Co., Ltd. is currently the largest shareholder, with 42% of shares outstanding. The second and third largest shareholders are SBI Holdings, Inc. and Matsui Securities Co., Ltd., with an equal amount of shares to their name at 6.9%.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of HS Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own some shares in HS Holdings Co., Ltd.. As individuals, the insiders collectively own JP¥1.9b worth of the JP¥36b 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 20% stake in HS Holdings. 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 Equity Ownership

With an ownership of 42%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand HS Holdings better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

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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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.