Public companies are Soracom, Inc.'s (TSE:147A) biggest owners and were rewarded after market cap rose by JP¥5.5b last week
Key Insights
- The considerable ownership by public companies in Soracom indicates that they collectively have a greater say in management and business strategy
- 56% of the business is held by the top 3 shareholders
- Insiders own 16% of Soracom
To get a sense of who is truly in control of Soracom, Inc. (TSE:147A), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are public companies with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, public companies collectively scored the highest last week as the company hit JP¥50b market cap following a 12% gain in the stock.
In the chart below, we zoom in on the different ownership groups of Soracom.
Check out our latest analysis for Soracom
What Does The Institutional Ownership Tell Us About Soracom?
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.
Soracom already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Soracom, (below). Of course, keep in mind that there are other factors to consider, too.
Soracom is not owned by hedge funds. KDDI Corporation is currently the company's largest shareholder with 42% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.2% and 6.4% of the stock. Ken Tamagawa, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
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. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Soracom
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.
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 information suggests that insiders maintain a significant holding in Soracom, Inc.. Insiders have a JP¥7.9b stake in this JP¥50b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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.
Private Equity Ownership
Private equity firms hold a 7.2% stake in Soracom. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Public Company Ownership
We can see that public companies hold 53% of the Soracom shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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 2 warning signs with Soracom (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.