A look at the shareholders of Raj Rayon Industries Limited (NSE: RAJRAYON) can tell us which group is more powerful. Generally speaking, as a business grows, institutions increase their participation. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if it’s just a little. As Nassim Nicholas Taleb said, âDon’t tell me what you think, tell me what you have in your wallet.
Raj Rayon Industries is a small company with a market cap of 13 billion yen, so it can still go under the radar of many institutional investors. Our analysis of company ownership, below, shows that institutions are not entered in the share register. We can zoom in on the different ownership groups, to find out more about Raj Rayon Industries.
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What does the lack of institutional ownership tell us about Raj Rayon Industries?
We don’t tend to see institutional investors owning stocks of very risky, lightly traded, or very small companies. While we sometimes see large companies without registered institutions, this is not particularly common.
There are many reasons why a company may not have institutions listed in the share register. It can be difficult for institutions to buy large amounts of stocks if liquidity (the number of stocks traded each day) is low. If the company did not need to raise capital, institutions might not have the opportunity to build up a position. It is also possible that the fund managers do not own the stock because they are not convinced that it will perform well. Institutional investors may not find the historical growth of the company impressive, or there may be other factors at play. You can see for yourself the past earnings performance of Raj Rayon Industries below.
Raj Rayon Industries is not owned by hedge funds. Raj Money Market, Ltd. is currently the largest shareholder of the company with 27% of the shares outstanding. Meanwhile, the second and third largest shareholders hold 6.0% and 3.5% of the outstanding shares, respectively. In addition, the CEO of the company, Sushil Kumar Kanodia, directly owns 2.9% of the total shares outstanding.
Our studies suggest that the top 8 shareholders collectively control less than half of the shares of the company, which means that the shares of the company are widely disseminated and there is no dominant shareholder.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the feelings of analysts. As far as I know, there is no analyst coverage of the company, so it probably goes under the radar.
Insider property of Raj Rayon Industries
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.
Insider ownership is positive when it indicates that executives think like the real owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Our information suggests that insiders have a significant stake in Raj Rayon Industries Limited. Insiders have a 2.2 billion yen stake in the 13 billion yen venture. This may suggest that the founders still own a lot of shares. You can click here to see if they bought or sold.
General public property
The general public – including individual investors – own 56% of Raj Rayon Industries. This size of property gives mainstream investors some collective power. They can and probably do influence decisions about executive compensation, dividend policies and proposed business acquisitions.
Owned by a private company
We can see that the private companies own 27% of the issued shares. It may be worth pursuing the question further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the business.
It’s always worth thinking about the different groups that own shares in a company. But to better understand Raj Rayon Industries, there are many other factors that we need to consider. Like risks, for example. Every business has them, and we’ve spotted 3 warning signs for Raj Rayon Industries (2 of which are a bit disturbing!) that you should know about.
Sure this might not be the best stock to buy. Therefore, you may want to see our free set of interesting prospects benefiting from a favorable financial situation.
NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last day of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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