Institutional investors are Raia Drogasil S.A.'s (BVMF:RADL3) biggest bettors and were rewarded after last week's R$1.4b market cap gain

Key Insights

• Institutions' substantial holdings in Raia Drogasil implies that they have significant influence over the company's share price
• 46% of the business is held by the top 25 shareholders
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Raia Drogasil S.A. (BVMF:RADL3), it is important to understand the ownership structure of the business. With 49% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit R$46b in market cap. The one-year return on investment is currently 24% and last week's gain would have been more than welcomed.

Let's take a closer look to see what the different types of shareholders can tell us about Raia Drogasil.

See our latest analysis for Raia Drogasil

What Does The Institutional Ownership Tell Us About Raia Drogasil?

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 Raia Drogasil. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Raia Drogasil's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Raia Drogasil. BlackRock, Inc. is currently the company's largest shareholder with 5.1% of shares outstanding. The second and third largest shareholders are JPMorgan Chase & Co, Private Banking and Investment Banking Investments and Schroder Investment Management Limited, with an equal amount of shares to their name at 5.0%.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Raia Drogasil

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Raia Drogasil S.A.. Insiders own R$4.1b worth of shares (at current prices). 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

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Raia Drogasil. 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 Raia Drogasil better, we need to consider many other factors. Take risks for example - Raia Drogasil has 1 warning sign we think 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.