In the wake of M. Dias Branco S.A. Indústria e Comércio de Alimentos' (BVMF:MDIA3) latest R$486m market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Given the large stake in the stock by institutions, M. Dias Branco Indústria e Comércio de Alimentos' stock price might be vulnerable to their trading decisions
• Itaú Investment Solutions S.A. owns 64% of the company
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

We check all companies for important risks. See what we found for M. Dias Branco Indústria e Comércio de Alimentos in our free report.

A look at the shareholders of M. Dias Branco S.A. Indústria e Comércio de Alimentos (BVMF:MDIA3) can tell us which group is most powerful. The group holding the most number of shares in the company, around 77% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutional investors endured the highest losses after the company's share price fell by 5.8% last week. The recent loss, which adds to a one-year loss of 30% for stockholders, may not sit well with this group of investors. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. Hence, if weakness in M. Dias Branco Indústria e Comércio de Alimentos' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

In the chart below, we zoom in on the different ownership groups of M. Dias Branco Indústria e Comércio de Alimentos.

See our latest analysis for M. Dias Branco Indústria e Comércio de Alimentos

What Does The Institutional Ownership Tell Us About M. Dias Branco Indústria e Comércio de Alimentos?

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.

M. Dias Branco Indústria e Comércio de Alimentos already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 M. Dias Branco Indústria e Comércio de Alimentos' earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. M. Dias Branco Indústria e Comércio de Alimentos is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Itaú Investment Solutions S.A. with 64% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 3.9% of the shares outstanding, followed by an ownership of 1.6% by the third-largest shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of M. Dias Branco Indústria e Comércio de Alimentos

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.

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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over M. Dias Branco Indústria e Comércio de Alimentos. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.