In the wake of M. Dias Branco S.A. Indústria e Comércio de Alimentos' (BVMF:MDIA3) latest R$308m market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Significantly high institutional ownership implies M. Dias Branco Indústria e Comércio de Alimentos' stock price is sensitive to their trading actions
• The largest shareholder of the company is Itaú Distribuidora de Títulos e Valores Mobiliários S.A. with a 64% stake
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

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. We can see that institutions own the lion's share in the company with 72% ownership. 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 4.5% last week. The recent loss, which adds to a one-year loss of 47% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. 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.

Let's delve deeper into each type of owner of M. Dias Branco Indústria e Comércio de Alimentos, beginning with the chart below.

View 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?

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 M. Dias Branco Indústria e Comércio de Alimentos. 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. 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 M. Dias Branco Indústria e Comércio de Alimentos, (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. Hedge funds don't have many shares in M. Dias Branco Indústria e Comércio de Alimentos. Our data shows that Itaú Distribuidora de Títulos e Valores Mobiliários S.A. is the largest shareholder with 64% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 3.9% and 1.4%, of the shares outstanding, respectively.

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

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 note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public, who are usually individual investors, hold a 24% stake in 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.

Private Company Ownership

We can see that Private Companies own 3.9%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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 like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.