Lavvi Empreendimentos Imobiliários S.A.'s (BVMF:LAVV3) market cap dropped R$205m last week; Public companies bore the brunt

Key Insights

• Lavvi Empreendimentos Imobiliários' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 3 investors have a majority stake in the company with 56% ownership
• 12% of Lavvi Empreendimentos Imobiliários is held by insiders

If you want to know who really controls Lavvi Empreendimentos Imobiliários S.A. (BVMF:LAVV3), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 25% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to R$1.7b last week, public companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Lavvi Empreendimentos Imobiliários.

View our latest analysis for Lavvi Empreendimentos Imobiliários

What Does The Institutional Ownership Tell Us About Lavvi Empreendimentos Imobiliários?

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 Lavvi Empreendimentos Imobiliários. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Lavvi Empreendimentos Imobiliários' historic earnings and revenue below, but keep in mind there's always more to the story.

Lavvi Empreendimentos Imobiliários is not owned by hedge funds. Cyrela Brazil Realty S.A. Empreendimentos e Participações is currently the largest shareholder, with 25% of shares outstanding. In comparison, the second and third largest shareholders hold about 16% and 15% of the stock. Additionally, the company's CEO Ralph Horn directly holds 9.9% of the total shares outstanding.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 56% stake.

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

Insider Ownership Of Lavvi Empreendimentos Imobiliários

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Lavvi Empreendimentos Imobiliários S.A.. It has a market capitalization of just R$1.7b, and insiders have R$200m worth of shares in their own names. 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, who are usually individual investors, hold a 22% stake in Lavvi Empreendimentos Imobiliários. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 15%, private equity firms could influence the Lavvi Empreendimentos Imobiliários board. 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.

Private Company Ownership

Our data indicates that Private Companies hold 20%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

Public companies currently own 25% of Lavvi Empreendimentos Imobiliários stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lavvi Empreendimentos Imobiliários better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Lavvi Empreendimentos Imobiliários (of which 1 can't be ignored!) you should know about.

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.