Institutional investors are Priner Serviços Industriais S.A.'s (BVMF:PRNR3) biggest bettors and were rewarded after last week's R$67m market cap gain

Key Insights

• Significantly high institutional ownership implies Priner Serviços Industriais' stock price is sensitive to their trading actions
• A total of 7 investors have a majority stake in the company with 55% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Priner Serviços Industriais S.A. (BVMF:PRNR3) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Last week’s 11% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 26% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Priner Serviços Industriais.

View our latest analysis for Priner Serviços Industriais

What Does The Institutional Ownership Tell Us About Priner Serviços Industriais?

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.

Priner Serviços Industriais 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. 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 Priner Serviços Industriais' historic earnings and revenue below, but keep in mind there's always more to the story.

It looks like hedge funds own 23% of Priner Serviços Industriais shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is Leblon Equities Gestão de Recursos Ltda. with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.9% and 8.1%, of the shares outstanding, respectively.

We did some more digging and found that 7 of the top shareholders account for roughly 55% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Priner Serviços Industriais

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

We can report that insiders do own shares in Priner Serviços Industriais S.A.. It has a market capitalization of just R$666m, and insiders have R$60m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 32% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Priner Serviços Industriais better, we need to consider many other factors. Be aware that Priner Serviços Industriais is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...

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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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.