Could The Fleury S.A. (BVMF:FLRY3) Ownership Structure Tell Us Something Useful?

A look at the shareholders of Fleury S.A. (BVMF:FLRY3) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Fleury has a market capitalization of R$8.1b, so we would expect some institutional investors to have noticed the stock. In the chart below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Fleury.

View our latest analysis for Fleury

What Does The Institutional Ownership Tell Us About Fleury?

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.

As you can see, institutional investors have a fair amount of stake in Fleury. 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. 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 Fleury, (below). Of course, keep in mind that there are other factors to consider, too.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Fleury. The company's largest shareholder is Bradesco Asset Management S.A. Distribuidora de Títulos e Valores Mobiliários, with ownership of 20%. For context, the second largest shareholder holds about 4.6% of the shares outstanding, followed by an ownership of 3.2% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 17 shareholders have a combined ownership of 51% implying that no one share holder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Fleury

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 information suggests that insiders maintain a significant holding in Fleury S.A.. It is very interesting to see that insiders have a meaningful R$1.5b stake in this R$8.1b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, with a 23% stake in the company, will not easily be ignored. 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

It seems that Private Companies own 3.2%, of the FLRY3 stock. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Fleury better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Fleury you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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