Institutional owners may consider drastic measures as CM Hospitalar S/A's (BVMF:VVEO3) recent R$115m drop adds to long-term losses

Key Insights

• Significantly high institutional ownership implies CM Hospitalar S/A's stock price is sensitive to their trading actions
• 52% of the business is held by the top 2 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of CM Hospitalar S/A (BVMF:VVEO3), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 75% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 14% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 89% might not go down well especially with this category of shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell CM Hospitalar S/A, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of CM Hospitalar S/A, beginning with the chart below.

View our latest analysis for CM Hospitalar S/A

What Does The Institutional Ownership Tell Us About CM Hospitalar S/A?

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.

We can see that CM Hospitalar S/A does have institutional investors; and they hold a good portion of the company's stock. 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 CM Hospitalar S/A, (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 CM Hospitalar S/A. Modal Asset Management Ltda. is currently the company's largest shareholder with 36% of shares outstanding. Oliveira Trust Servicer S.A. is the second largest shareholder owning 16% of common stock, and Dynamo Administracao de Recursos Ltda. holds about 10% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

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 CM Hospitalar S/A

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CM Hospitalar S/A. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Be aware that CM Hospitalar S/A is showing 5 warning signs in our investment analysis , and 3 of those are a bit unpleasant...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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