Marfrig Global Foods S.A.'s (BVMF:MRFG3) market cap dropped R$334m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Marfrig Global Foods indicates that they collectively have a greater say in management and business strategy
• 54% of the company is held by a single shareholder (MMS Participações S.A.)
• Insider ownership in Marfrig Global Foods is 10%

A look at the shareholders of Marfrig Global Foods S.A. (BVMF:MRFG3) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 54% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by R$334m.

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

Check out our latest analysis for Marfrig Global Foods

What Does The Institutional Ownership Tell Us About Marfrig Global Foods?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Marfrig Global Foods does have institutional investors; and they hold a good portion of the company's stock. 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 Marfrig Global Foods' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Marfrig Global Foods. Looking at our data, we can see that the largest shareholder is MMS Participações S.A. with 54% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 6.4% and 3.8%, of the shares outstanding, respectively. Two of the top three shareholders happen to be Controller and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Marfrig Global Foods

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.

It seems insiders own a significant proportion of Marfrig Global Foods S.A.. It is very interesting to see that insiders have a meaningful R$909m stake in this R$8.9b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Marfrig Global Foods. 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

It seems that Private Companies own 54%, of the Marfrig Global Foods 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Marfrig Global Foods (of which 1 is potentially serious!) you should know about.

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.